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November 14, 2006
Measuring informal innovation
Two Swiss academics - Marcel Bogers and Stéphane Lhuillery - have taken a close look at their nation's 2000-2002 innovation survey and have teased out a measurement of informal innovation. Informal innovation is that which does not come from formal R&D. As they define it, informal innovation includes "marketing, design and engineering capabilities, training and learning (e.g., by doing), monitoring external sources of innovation, development new production facilities, acquiring of new technologies and technical information or know-how, and organizational investment and change" and is "generally embodied in people and organizations." This is the type of innovation that often does not get captured in standard OECD innovation surveys -- and is completely overlook in the US tech-centric discussion of innovation policy. [In fairness to the work of the OECD, this paper seems to be focused on the previous generation of the OECD innovation surveys. The 3rd Edition of the Oslo Manual on innovation does a much better job at looking at marketing and organizational innovations.]
The paper's findings are very interesting:
Our results show that around half of all the (innovative) firms in the sample could be considered as being informal innovators, in line with our definition. In particular, service firms were confirmed to be mostly involved in this informal innovation whereas high-tech firms are less likely to be (exclusively) involved in non-R&D innovation. Furthermore, we show that non-R&D innovation is associated to product innovation as well as process innovation. The process innovation side is contended to rely on learning-by-doing or learning-by-using. Non-R&D (innovative) firms account here for more than one third of the total reduction of production costs due to process innovation, which in particular holds for smaller firms and service industries. Non-R&D innovations are thus important substitutes for R&D-based innovation. These results show that a large part of the economy is not considered by Science and Technology (S&T) policy makers, as they focus on one side of the knowledge production in enterprises.
The importance of informal innovation has recognized for quite some time. Nobel-prize winner Ken Arrow pointed out the role of "learning-by-doing" back in 1962. Subsequently over the past 40 years, we have heard discussions of "learning-by-using" and "customer-driven" innovation.
These are the areas upon which we need to build our broader national innovation policy. Unfortunately, they are also the areas which are the most difficult to affect with public policy. Funding R&D and training more scientist and engineers is easy. Finding ways to spur informal innovation is hard.
But that is exactly what we must do.
Posted by Ken Jarboe at November 14, 2006 7:40 AM
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