Parallel Session 4 - Tuesday 20 September 2016

1. Defining and Measuring Innovation
in all Sectors of the Economy
Policy Relevance
Fred Gault, UNU-MERIT, TUT-IERI and SciSTIP
OECD Blue Sky Forum, Informing Science and Innovation Policies
Towards the Next Generation of data and indicators
19-21 September, 2016, Ghent, Belgium

2. Introduction

3. The Oslo Manual
• OECD (1992) – Proposed guidelines …
• Product and process innovation (inputs to outputs)
• Manufacturing
• Technological innovation
• Used (partial implementation) for CIS 1 for reference year 1992
• OECD/Eurostat (1997) – Proposed guidelines …
• Product and process innovation (inputs to outputs and delivery)
• All business enterprise
• Technological innovation
• Used in CIS
• OECD/Eurostat (2005) – Guidelines
• Product and process innovation (inputs to outputs and delivery)
• All business enterprise
• Two methods – organisation and marketing innovation
• Used in CIS
References are in the conference paper

4. Innovation for measurement purposes since 2005
• An innovation is the implementation of a new or significantly
improved product (good or service), or process, a new marketing
method, or a new organisational method in business practices,
workplace organisation or external relations (OECD/Eurostat 2005,
para 146)
• A common feature of an innovation is that it must have been
implemented. A new or improved product is implemented when it is
introduced on the market. New processes, marketing methods or
organisational methods are implemented when they are brought into
actual use in the firm’s operations (OECD/Eurostat 2005, para 150)

5. Domain of the definition
• Included
• Business sector (formal)
• Firms as innovators, including firms
as user innovators
• Private non-profit institutions
• Business sector (informal) – Jacques
Charmes
• Question about the production unit
• Excluded
• Public sector – Anthony Arundel and
Carter Bloch
• Government departments
• Education institutions
• Health institutions
• Research institutions
• Consumers/Individuals – Jeroen P.J.
de Jong (and Eric von Hippel)
• Groups not acting as a firm
• Social interest groups
• Professional interest groups

6. Using the definition
• Oslo Manual definition is not normative
• Firm innovates or it does not – information from CIS
• More information requires analysis
• Divide the population and look at the variable of your choice
• Correlations from repeated cross-sectional surveys
• Causal links from panel surveys
• More firms innovate than do R&D
• There is a difference between innovation policy and S&T policy
• Innovation depends on firm size and firm age

7. Generalising the definition of innovation

8. Changing/Generalising the definition
• Main changes
• ‘Process’ and the two ‘methods’ become one process with three components
• ‘improved’ becomes ‘changed’ avoiding normative statements
• Market becomes ‘potential users’
• Process change is linked more closely to potential users
• For the Business sector, this makes little difference but
• Included are firms, public sector institutions and households that make
products available to potential users at no cost as well as at economically
significant prices
• This could lead to two sets of innovation statistics – zero cost and
economically significant cost

9. A generalized definition
• An innovation is the implementation of a new or significantly changed
product or process. A product is a good or a service. Process includes
production or delivery, organisation, or marketing processes.
• A new or significantly changed product is implemented when it is
made available to potential users. New or significantly changed
processes are implemented when they are brought into actual use in
the operation of the institutional unit, as part of making product
available to potential users.

10. Outcomes
• Internationally comparable definitions of innovation for all SNA
sectors
• Support for policy development in the Public and Private sector, and
for monitoring and evaluation of implemented policies
• Stimulus for more analysis of innovation in all SNA sectors and the
interactions between them
• Linkages within sectors and between institutions in different sectors become
new indicators (in addition to being the basis for non-linearity of innovation
systems)

11. Intentions, restricted innovation, and remaining issues

12. Restricted innovation
Are intentions realised?
• So far the focus has been on inferring the activity of innovation using
internationally agreed definitions to support measurement
• Policy interest goes beyond just innovation to consider
• Sustainable, green, responsible, pro-poor, inclusive … innovation
• Sustainable innovation for inclusive development
• To measure this ‘restricted’ innovation requires additional surveys,
including social surveys, conducted at different times
• Definitions of sustainable, green, inclusive, etc. are also needed for
measurement purposes
• Additional time scales require a longer term measurement perspective.
• This is a matter for discussion by statisticians and policy developers

13. Social innovation
• What about ‘social innovation’
• An evolving subject
• Overlap with household innovation?
• Communities solving problems for mutual benefits
• Communities of practice, peer groups, …
• Many definitions, but measurement is not prominent
• An evolving subject*
* See Moulaert et al. (2013), The Handbook on Social Innovation, Collective Action, Social Learning and
Transdisciplinary Research, Elgar.

14. Conclusion
• Innovation happens in all economic sectors
• Definitions of innovation are not standard outside of the Business
sector
• Much work is being done on public sector and household innovation
and time is opportune for the Oslo Manual to acknowledge the
empirical evidence and to provide a basis for manuals in other
economic sectors
• Policy in all sectors can impose restrictions on innovation and this
must be accommodated by the measurement community
• Social innovation remains a challenge