User Innovation
Empirical Evidence from Russia
Anna Zaytseva
PhD candidate in political sciences,
Centre d'études de la vi...
Defining User Innovation
§  User-innovators are firms or individual consumers that
expect to benefit from using a novel p...
Defining User Innovation
DOMINANT PRODUCERORIENTED POLICY MODEL

FOCUS ON:
•  Stimulating innovation
commercialization
by ...
Factors of user-innovation development
Lower communication and
design costs
Better access to
IT equipment

Progressive mod...
New Opportunities for Knowledge Economy (1):
New	
  Opportuni1es	
  for	
  Knowledge	
  Economy	
  (1):	
  	
  
More effic...
 

New	
  Opportuni1es	
  for	
  Knowledge	
  Economy	
  (2):	
  	
  
New Opportunities for Knowledge Economy (2):
Fosteri...
New	
  Opportuni1es	
  for	
  Knowledge	
  Economy	
  (3):	
  

New Opportunities for Knowledge Economy (3):
Diminishing	
...
New	
  Opportuni1es	
  for	
  Knowledge	
  Economy	
  (4):	
  
New Opportunities for Knowledge Economy (4):
Intensifying	
...
New	
  Opportuni1es	
  for	
  Knowledge	
  Economy	
  (5)	
  
New Opportunities for Knowledge Economy (5)
Enforcing	
  the...
Rationale for a new model of innovation policy

§  User-­‐oriented	
   innova1on	
   support	
   should	
   not	
  
subs1...
Measurement of user innovation: the state-of-art
§ 

The current statistics on innovation reflects the dominant producer-...
Research methodology (1)
•  Objectif : measurement of user-innovators population in
Russia and further advancement in unde...
Research methodology (2)
• 

The survey was launched in 2011: series of questions within a larger monitoring survey on the...
Research methodology (3)
•  The questions were built around the following blocs:
1) share of user-innovators and their soc...
Share of user innovation
Share of consumer innovation
RUSSIA	
  

	
  

US	
  

More than five Less than five
years ago	
 ...
Socio-demographic profile (1):
§ 

Two thirds of user-innovators are men

§ 

Higher level of education

§ 

28% of use...
Socio-demographic profile (2):
• 

New userinnovators» live more
often in middle and
small settlements,
whereas «old
innov...
Differentiation of user
motivation to innovate:
•  Users who were motivated to innovate because the items
required were no...
Demand for
innovative
products
• 

User innovators are
amongst the earliest
consumers of innovative
technical products:

T...
Perception of
innovative
products (1)
What is the need for userinnovators to cope with modern
technical equipment and new
...
Perception of innovative products (2)
•  Almost ¾ of user-innovators reported to adjust their
technical equipment accordin...
Channels of information diffusion
• 

User-innovators are more closely monitoring the new technology market.

• 

Almost a...
Discussion of results (1)
• 

User Innovation as Compensation of the Price Factor

o 

Russian user innovators (end-consum...
Discussion of results (2)
• 

Producer innovation is no longer the only way to cover production
expenditures and the costs...
Thank you very much
for your attention!
Anna Zaytseva
Anna.s.zaytseva@gmail.com

Anna Zaytseva, CEVIPOL, ULB,
FURTHER DISCUSSION

Principles for user-oriented innovation model
Key tasks for user-oriented innovation policy:
§ Ensure...
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User innovation empirical evidence from Russia

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User innovation empirical evidence from Russia

  1. 1. User Innovation Empirical Evidence from Russia Anna Zaytseva PhD candidate in political sciences, Centre d'études de la vie politique (CEVIPOL), Université Libre de Bruxelles (ULB). Dataset from the joint project carried out in collaboration with Olga Shuvalova and Dirk Meissner at the National Research University - Higher School of Economics (Moscow, 2011-2012).
  2. 2. Defining User Innovation §  User-innovators are firms or individual consumers that expect to benefit from using a novel product or a service they develop §  Producer-innovators expect to benefit from selling the novel product or service they develop in the marketplace Source: NESTA (2010). Measuring Innovation in UK. London. Anna Zaytseva, CEVIPOL, ULB,1
  3. 3. Defining User Innovation DOMINANT PRODUCERORIENTED POLICY MODEL FOCUS ON: •  Stimulating innovation commercialization by producers •  Technological innovations Higher School of Economics , Moscow 2011 •  •  Green Innovations Social Innovations OUT OF FOCUS: 10-40% of users are involved into modifying and innovating products and services Lacking statiscal tools Lacking policy tools Lacking consistent international policy framework Anna Zaytseva, CEVIPOL, ULB,1
  4. 4. Factors of user-innovation development Lower communication and design costs Better access to IT equipment Progressive modularity of business schemes Digitalization Democratization and globalization of knowledge More sophisticated user needs/ Customization of demand Reduction of product cycle/ Acceleration of innovation dynamics Anna Zaytseva, CEVIPOL, ULB,1 Loss of the resources monopoly by the producers Technological regime change
  5. 5. New Opportunities for Knowledge Economy (1): New  Opportuni1es  for  Knowledge  Economy  (1):     More efficient satisfaction of user needs     Surpassing  the   ‘informa1on  s1ckness’   and  ‘informa1on   asymmetry’  risks     Higher School of Economics , Moscow 2011 Ensuring  higher  success   of  products  and  or/ services  at  the  market   Anna Zaytseva, CEVIPOL, ULB,1
  6. 6.   New  Opportuni1es  for  Knowledge  Economy  (2):     New Opportunities for Knowledge Economy (2): Fostering  the  crea.on  of  new  markets  and  enlarging   Fostering the creation of new markets and enlarging the  exis.ng  ones   the existing  ones   Bringing functional innovations to the markets Anna Zaytseva, CEVIPOL, ULB,1 Higher School of Economics , Moscow 2011 Exploring opportunities for new niches and new markets Fostering competition for better quality (vs. price-driven competition) Source: [de Jong, von Hippel, 2010]
  7. 7. New  Opportuni1es  for  Knowledge  Economy  (3):   New Opportunities for Knowledge Economy (3): Diminishing  transac.on  c for for  knowledge  diffusion   Diminishing transaction costsosts  knowledge diffusion     § Economics  of  free  revealing:   o  spillovers  of  voluntary  informa1on-­‐sharing  by  user  innovators   o  documented  in  mul1ple  studies  [von  Hippel,  Finkelstein  (1979),  Ramond  (1999),  Nuvolari   (2004);  Morrison,  Roberts,  von  Hippel  (2000),  Franke,  Shah  (2003),  etc.]   § For  users    it  is  more  profitable  to  ensure  the  diffusion  of  informa1on  than   informa1on  protec1on:   o  reputa1on  advantages,  networks,  quality  improvement  versus  IP-­‐related  costs   § For  companies  free  revealing  enables:   o  to  ensure  broad  diffusion  of  given  know-­‐how’s  while  promo1ng  the  brand  (and  oZen   commercializing  an  accessory  good)     o  flexible  adapta1on  of  soZware  for  organiza1onal  and  technical  needs  of  a  given  company       (i.e.  open  source  use)   o  Examples:  GNU/Linux  (General  Public  License),  IBM,  Oracle,  Red  Hat,  Google,  etc.     -­‐      Higher School of Economics , Moscow 2011 Anna Zaytseva, CEVIPOL, ULB,1
  8. 8. New  Opportuni1es  for  Knowledge  Economy  (4):   New Opportunities for Knowledge Economy (4): Intensifying  service  sector  development   Intensifying service sector development   §  Meaningful innovations in service sector are often not related to R&D §  Knowledge-intensive business services (KIBS) are characterized by -  Individualized character of production Increases the impact of user innovation In KIBS -  Diversified demand -  Co-production with service customers Neutralisation of information asymetry Higher School of Economics , Moscow 2011 Building trust for innovation products Source: [Doroshenko, 2010] Fostering the absorptive capacity for knowledgeintensive services Anna Zaytseva, CEVIPOL, ULB,1
  9. 9. New  Opportuni1es  for  Knowledge  Economy  (5)   New Opportunities for Knowledge Economy (5) Enforcing  the  inclusive  model  of  economic  growth   Enforcing the inclusive model of economic growth §  Inclusive  innova.on  growth  aims  at:   o  elimina1ng  the  innova1on  cleavages  for  different  groups   o  ensuring  equal  opportuni1es  for  par1cipa1on  in  the  innova1on  process   o   improving  the  welfare  and  human  capital  development  for  vulnerable  groups   à  The  user  innova1on  support  as  an  effec1ve  policy  tool  to  compensate  low  level  of  innova1on   ac1vity  in  countries  lacking  technical  and  material  basis  and/or  codified  knowledge   §  Emphasis  on  ‘Par.cipatory  approach’  in  interna1onal  organiza1ons:   o  UNDP,  OECD,  UNIDO  Declara1ons   o  The  «  ownership  »  issue  as  a  key  principle  of  interna1onal  ac1on  aimed  at  economic  development,  post-­‐conflict  stabilisa1on,  etc.    Relevant  example:  recogni.on  of  mul.ple  sources  of  innova.on  prac.ces  in  rural  industry   and  promo.on  of  prac.ces  adopted  by  local  users     The  World  Bank  Report  (2010)  «  Innova1on  policy:  A  guide  for  developing  countries  »:   promo1ng  grass-­‐roots  and  pro-­‐poor  innova1ons;  technology  development  in  informal  sector  of   the  economy  and  community-­‐based  development  ini1a1ves   Higher School of Economics , Moscow 2011 §  Anna Zaytseva, CEVIPOL, ULB,1
  10. 10. Rationale for a new model of innovation policy §  User-­‐oriented   innova1on   support   should   not   subs1tute   producer-­‐oriented   policy   tools   but   rather   fulfill   a   complementary   driver   to   improve   innova.on  climate  and  trigger  mass  innova.on   Anna Zaytseva, CEVIPOL, ULB,1 Higher School of Economics , Moscow 2011
  11. 11. Measurement of user innovation: the state-of-art §  The current statistics on innovation reflects the dominant producer-oriented model and R&Dbased innovations -  §  i.e. OECD statistics: consumer as information provider; yet no data on type of related innovation; on transfer conditions; no surveys destinated to consumers/users + problems to refect intangible assets First surveys on user innovations: 1.  Canada: plants using advanced manufacturing technologies 2.  The Netherlands: firm-level survey within the project on S&M development 3.  The UK: first national survey on user innovation at the level of end consumers (NESTA, 2009) N.B.: the survey did not include questions on user innovations in service sector 4. §  Empirical Studies conducted in USA and Japan (Ogawa, Pogtanalert, 2011) In need of improved methodology (intangible assets measurement; precised definition of process innovation; taxonomy of user innovations, etc.) and more empirical evidence (national, crosssector level, etc.) Higher School of Economics , Moscow 2011 Anna Zaytseva, CEVIPOL, ULB,1
  12. 12. Research methodology (1) •  Objectif : measurement of user-innovators population in Russia and further advancement in understanding of patterns which determine user-innovators’ activities •  Main focus: individual end-consumers (and not user innovation at the firm level) •  Info on the user innovation project: o  Conducted in 2011-2012 by Anna Zaytseva, Olga Shuvalova and Dirk Meissner o  Laboratory for Science and Technology Studies, Institute for Statistical Studies and Economics of Knowledge, National Research University Higher School of Economics. Anna Zaytseva, CEVIPOL, ULB,1
  13. 13. Research methodology (2) •  The survey was launched in 2011: series of questions within a larger monitoring survey on the innovation behavior of Russian population conducted in the framework of the Basic Research Program of the NRU-HSE. •  1600 respondents older than 18 years and it covered 130 settlements from 45 Russian regions (both urban and rural settlements). •  The size of the sample is thus comparable other empirical studies conducted in the UK, USA and Japan (1171, 1992 and 2000 respondents accordingly). •  « Have you ever created new devices, technical equipment for personal consumption (for you, your family and friends) or to improve something amongst technical devices you have?». «Случалось ли Вам в течение последних пяти лет создавать новые устройства, технические средства для личного потребления (для Вас, Вашей семьи, друзей) или что-то усовершенствовать в имеющихся в Вашем распоряжении технических средствах?» NB This formulation of the questions limits in a way innovative products to devices and techniquebased products. Hence the findings do not include innovation in services, marketing and organizational innovations. Anna Zaytseva, CEVIPOL, ULB,1
  14. 14. Research methodology (3) •  The questions were built around the following blocs: 1) share of user-innovators and their socio-demographic profile; 2) motivation for innovation activity at home; 3) demand for innovative products; 4) interest for innovative products; 5) channels of information diffusion used by user-innovators. Anna Zaytseva, CEVIPOL, ULB,1
  15. 15. Share of user innovation Share of consumer innovation RUSSIA     US   More than five Less than five years ago   years ago   Consumer creator     1,1%   2,9%   Consumer modifier   Both   Total   Japan   UK   1,7%   2,1%   3,4%   3,3%   2,8%   2,5%   4,5%   3,5%   0,5%   0,5%   0,5%   5,2%   3,7%   6,1%   7, 8%   Source: Based on [Ogawa, Pogtanalert, 2011]. Anna Zaytseva, CEVIPOL, ULB,1
  16. 16. Socio-demographic profile (1): §  Two thirds of user-innovators are men §  Higher level of education §  28% of user-innovators are qualified laborers, 20% of them are specialists and 23% of them are retirees §  The age and income distribution is not significantly different from the rest of the population NB Given the relatively small sample of user-innovators group we cannot proceed to detailed quantitative analysis, so at this exploratory stage we are limited to highlighting some of user-innovator features on qualitative level. Anna Zaytseva, CEVIPOL, ULB,1
  17. 17. Socio-demographic profile (2): •  New userinnovators» live more often in middle and small settlements, whereas «old innovators» can be more often found in big cities. Users who created new products are 1,85 times more present in middle cities and 1,6 times more present in villages. This can lead us to suggest that there is non linear relationship between user-innovation activity and type of settlement. •  Motivation for user innovation engagement differs across types of settlements!   All   N (Number of respondents)   Family A   socioB   economic C   income*:   D   125   3   21   56   19   User-innovators   who did innovations less than 5 years ago   because the products required…   are not sold are too out in the expensive   All   shops   73   21   45   2   0   3   17   5   18   59   60   64   22   30   15   All   respon-   dents   1600   6   23   55   15   E   1   5   0   1   Moscow   Large cities   8   5   4   7   7   20   19   0   31   21   27   30   36   24   20   20   19   28   10   26   Villages   Type of settlemen t*:   1   24   27   32   28   26   Creation of new devices   15   25   46   19   1   Modificati on/ Improvem ent of devices   44   75   54   81   3   Middle cities   Small cities   Type of innovatio ns:   Anna Zaytseva, CEVIPOL, ULB,
  18. 18. Differentiation of user motivation to innovate: •  Users who were motivated to innovate because the items required were not sold out in the shops are from middle, small cities and villages. In these settlements in Russia the market is significantly less saturated with products than in large cities and especially in Moscow. •  The motivation to innovate because the product is too expensive is therefore almost equally shared across different types of settlements, and the biggest share of people with this motivation can be found in large cities and villages. Anna Zaytseva, CEVIPOL, ULB,1
  19. 19. Demand for innovative products •  User innovators are amongst the earliest consumers of innovative technical products: Their household is generally equipped better than the average for ten out of thirteen products •  Higher level of demands “Demand”. What does your family have from the items mentioned above? What would you like to get/ renew if you had enough money for the purchase? Technical equipment     Demand for technical products   New userinnovators*   All respondents   New userinnovators*   All respondents   73   1600   73   1600   Mobile phone   Flat TV (LCD, plasmic)   3D-TV   Cable TV   89   91   94   94   50   5   33   38   4   39   66   31   46   66   23   48   Satellite antenna   Digital camera or videocamera   24   16   35   32   50   43   62   55   Internet access   Hi-speed internet access   Mobile device for internet access   51   45   58   52   28   24   37   35   23   16   28   24   JPRS-navigator   Dishwashing machine   Air cleaner/ moisturizer/ ioaniser   Air condititioning   12   7   23   19   9   5   42   28   15   7   36   25   15   12   35   33     N (Number of respondents)   Questions: “Technical equipment”. What items from the list do you have in your family? “Demand”. What does your family have from the items mentioned above? What would you like to get/ renew if you had enough money for the purchase? Anna Zaytseva, CEVIPOL, ULB,
  20. 20. Perception of innovative products (1) What is the need for userinnovators to cope with modern technical equipment and new products in general? •  “To keep up with life” (43%) •  User-innovator habits relate more to work-oriented practices than average users (19% compared to 12%). •  •  Adore modern equipment more than the others (18% compared to 9%) Yet, their approach towards novelties is based on critical assessment, in other words we can assume that user-innovators have high expectations to products and their approval of products is rather based on their needs than systematic adoration innovations.     All  respondents   User-­‐innovators   All   who  did  innov.  >5   years  ago   125   73   N  (Number  of   1600   respondents)   Which  of  the  following  statements  reflects  the  best  your  percep.on  of  technical  novel.es?   (Only  one  answer  is  possible)     I  adore  technical   9   14   18   novel1es  and  try  to   use  them  every   1me     Modern  equipment   41   42   43   has  to  be  used  to   keep  up  with  life     I  use  some  of   technical  novel1es   because  it  is   necessary  at  work   12   16   19   My  children   encourage  our   family  to  use   technical  novel1es     12   12   12   I  barely  encounter   modern  equipment   in  daily  life   12   6   3   Modern  equipment   frightens  me   5   3   1   None  of  it   Have  difficulty  to   respond   4   6   5   3   5   0   Anna Zaytseva, CEVIPOL, ULB,
  21. 21. Perception of innovative products (2) •  Almost ¾ of user-innovators reported to adjust their technical equipment according to their needs and taste if such possibility is provided. Remarkably, almost a half of users is generally involved into such kind of activities. •  Potential of active user engagement into product innovation process. à This is not to be ignored by companies who can facilitate this process by providing product design or infrastructure facilities which can enable users to adjust the products according to their needs and taste. Anna Zaytseva, CEVIPOL, ULB, Moscow 2011
  22. 22. Channels of information diffusion •  User-innovators are more closely monitoring the new technology market. •  Almost a half of them are looking at the emergence of novelties (46% as compared to 27% in average). •  They also tend to consult other users’ review and comments available on Internet (35% amongst “new user-innovators” as compared to 23%) and to get the information required from the media. •  Innovative users reported to pay more attention to advertising: 7% of “new userinnovators” try to acquire new products under the influence of advertisement and 31% of them take it into account when making their decisions. Yet, the majority of users, both innovative and non-innovative are likely to ignore advertising (62% of the sample and 55% of user-innovators). •  57% of “new user-innovators” reported to consult user reviews on a particular product model before buying it. à This finding emphasizes again the importance of informal sources of information for users who are likely to adjust their personal equipment according to their individualized needs. Anna Zaytseva, CEVIPOL, ULB,
  23. 23. Discussion of results (1) •  User Innovation as Compensation of the Price Factor o  Russian user innovators (end-consumers) are more driven by the price factor than by product absence on the market. o  Our hypothesis: user innovators tried to compensate price determination in a local market by enlarging the supply side. •  User Innovation as Compensation of Market Failures àour findings reveal the importance of market saturation as a research dimension on user innovation o  Moscow and Saint-Petersburg concentrate 46% of sales areas of the country o  the other city with population above million of people concentrate 30% from the remaining sales areas. o  à75% of population can access only to 24% of sales area [Minpromtorg Rossii, 2011]. o  About 5% of Russian population does not have access to sales areas in their settlements. o  Access to sales areas is especially difficult in remoted areas in Russia where sales areas often just do not exist. o  Multiple regions do not seem to be attractive as sales spots since they are characterized by massive outflows of younger population. •  User innovation provides an indication of unsatisfied demand and inadequate supply. Hence, data on user innovation is important for designing demand-driven strategies at company level, but also on a more global scale (industry, regional level, etc.). Anna Zaytseva, CEVIPOL, ULB, 11
  24. 24. Discussion of results (2) •  Producer innovation is no longer the only way to cover production expenditures and the costs of innovation. We suggest that further studies need to focus on user-innovators expenditures in order to explore this dimension. The methodological problem which has to be addressed next is to understand the types of innovations which result from user innovation motivated by the price factor. •  In-depth analysis of user innovation should also include an analytical dimension about the properties of the local markets •  Overall, empirical evidence on user innovation in Russia suggests that there is a strong potential for stimulation of more active collaboration with users. •  Ensuring that innovation is a « routine task » for a broad range of people would effeciently complement top-down policy initiatives and contribute to shape conditions for a sustainable innovation-based growth Anna Zaytseva, CEVIPOL, ULB
  25. 25. Thank you very much for your attention! Anna Zaytseva Anna.s.zaytseva@gmail.com Anna Zaytseva, CEVIPOL, ULB,
  26. 26. FURTHER DISCUSSION Principles for user-oriented innovation model Key tasks for user-oriented innovation policy: § Ensure that there is no negative impact of producer-oriented measures on user innovators § Mobilize the potential of « hidden innovation » and individual user initiatives to fully benefit from social and economic spillovers from innovation activity Key principles: 1. Stimulate individual initiatives (instead of collective activity-oriented support) 2. Formulate and implement new IP regulations (win-win situation) 3. Ensure free access to innovation activities results via grants, competitions schemes 4. Actively contribute to networks development between users and producers 5. Deliver information and organizational support to producers to enhance their interaction 6. Tailored support to inidividual user-innovators becoming enterpreneurs 7. Develop and implement programs to improve innovations skills of the population 8. Improve  indicators  for  innova.on  measurement   Higher School of Economics , Moscow 2011 Anna Zaytseva, CEVIPOL, ULB,1
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