Parallel session 3 - Wednesday 21 September 2016

1. Using New Growth Theory to Sharpen the Focus on People and
Places in Innovation Measurement
Carol A Robbins
National Science Foundation
National Center for Science and Engineering Statistics
www.nsf.gov/statistics/
OECD Blue Sky III Forum
September 21, 2016
Ghent, Belgium

2. Motivation
• Oslo Manual framework:
– Business sector focus
• Clear guidance for measurement
• Limitations for policy purposes
– Outcomes
– Human capital
– Regional Innovation
2

3. Roadmap
• Conceptual framework for innovation data
• New Growth Theory highlights people and
places
• Data gaps for policy purposes
• Opportunities with data linking
3

4. Building from Schumpeter
• new and improved products and production methods
• opening of new markets
• acquisition of new sources for raw or intermediate
inputs
• organizational changes in the firm or sector, including
the creation or destruction of a monopoly position
• Individuals as entrepreneurs
Schumpeter, 1934
• Oslo Manual evolved in this tradition
4

5. New Growth Theory
• Romer (1986, 1991), Lucas (1988)
– Production creates useful knowledge used in
further production
• Intangible assets
• Human capital
• As knowledge accumulates, increasing returns
are possible
5

6. Human Capital and Innovation
• Human capital is an input to innovation
• Returns for firms as well as individuals
– Grows through education, entrepreneurship,
patenting, and collaboration
• Can help track sources of innovation outside
of the firm
• Grossman and Helpman (1991)
– Innovation takes place where human capital is
abundant
6

7. Innovation and Local Activity
• While intangible capital can travel widely
– Informal knowledge spreads locally
• Clusters of firms and industries
– Interconnected firms can reap increasing returns
(Porter, 1990)
• Potential for skewed outcomes across regions
– National innovation is the outcome of uneven
regional innovation dynamics
7

8. Data Gaps for Policy Purposes
• The impact of human capital on innovation at
the firm level
– Education, invention, entrepreneurship
• People within firms who innovate
– how the innovations emerge
• Links between firms and the characteristics of
their geographic region
– support the firms’ innovation activity
8

9. Scarcity of subnational data for
innovation policy
• Survey costs and confidentiality issues
• Insufficiently connected data
– Employment, firms, patenting
– Input-output linkages based on national industry
patterns
• Hand-collected data sets at the regional level
– Relational database curated by Feldman and
colleagues Research Triangle in North Carolina
– Linking firms and founders over time
9

10. Highly Skilled Worker Flows to
Locations and Industry
• Flows of newly-granted PhDs
– Geographically focused measure of human capital
flows to firms and industry
– Pattern of inputs to innovation that differ from
R&D expenditures (Stephan, 2006)
• Less geographically concentrated
• More representation by small firms
– Help track sources of innovation
10

11. Linked Data: Income and Invention
• Toivanen and Väänänen (2012)
– Finnish employment and income data linked with
patent data
• patent grants raise near term earnings of 3%
• highly cited patents raise longer term earnings 30%
• Bell, et al (2016)
• U.S. tax record data linked with patent data and math scores
– Higher income families more like to produce inventors
– Exposure to science and innovation in childhood more likely to
produce inventors
– Useful data if innovation and invention is a key policy objective-
what influences participation? 11

12. New Firm Creation and Invention
• Slowing rate of new firm formation for many
developed countries
– (Decker, et al 2015, Bravo-Biosca et al 2013, Criscuolo et al 2014)
• Small patenting firms disproportionately
contribute to job growth
– (Graham et al, 2015)
– less than 1 percent of firms patent
– impact is less than 1.5% of gross job creation
• Patenting is a rare event
12

13. Next steps--Linking to Business
Innovation Data
• Business R&D and Innovation Survey data provide
a broader picture of innovation
– In the US, 14.3% of firms reported a product or
process innovation between 2008 and 2011
• Potential links to business register data on firm
creation
– US R&D and Innovation Data (Zola et al 2015)
– Netherlands (Bartelsman, et al 2013)
– Micro-Business R&D and Innovation Survey
– Annual Survey of Entrepreneurs
13

14. Human Capital Data for Innovation Policy
• Oslo Manual guidance covers innovation
incidence, inputs, and activities
• Innovation policy data requires links to outcomes
and dynamics
• New growth theory highlights the role of people
in innovation through human capital
• Innovation has a strong local dimension
innovation level
• A person-sized unit is the right size to augment
business innovation data for policy purposes 14

15. Thank you
Carol Robbins:
crobbins@nsf.gov
Link to paper:
http://www.oecd.org/sti/blue-sky-2016-
agenda.htm#ps4_d3
Link to workshop proceedings:
https://www.nap.edu/read/23640/chapter/1
15

16. The Oslo Manual, third edition
• “An innovation is the implementation of a new or
significantly improved product (good or service), or
process, a new marketing method, or a new organizational
method in businesses practices, workplace organization or
external relations.
• A new or improved product is implemented when it is
introduced on the market. New processes, marketing
methods, or organizational methods are implemented
when they are brought into actual use in the firm’s
operations.
• An innovation must be new to the firm. This includes
products, processes and methods that firms are first to
develop, and those they have adopted from other firms or
organizations (OECD European Communities 2005).” 16