Innovation
Policy News05
INNO-Grips Newsletter June 2012
www.proinno-europe.eu/innogrips/newsletters
TablE of ContentS
Editorial – Hannes Selhofer // P 02 Disruptive innovation: implications for innovation policy // P 03 Social attitudes to innovation and entrepreneurship // P 07 Benchmarking innovation performance // P 10 International innovation policy news // P 13 About INNO-Grips // P 15 Imprint // P 16
INNO-Grips discusses Christensen’s framework from a policy perspective:
Disruptive innovation: implications for competitiveness and innovation policy A new INNO-Grips policy brief discusses the implications of disruptive innovation for effective innovation policy design. The framework, which was initially introduced by Clayton M. Christensen in his bestseller “The Innovator’s Dilemma” (1997), has been influential in management and business strategy literature; however, there has been hardly any discussion so far of whether disruptive innovation requires specific responses in innovation policy. read more on Page 03
European Commission Enterprise and Industry
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// EDITORIAL
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Innovation and the European crisis:
the virtuous and the vicious circle
Hannes Selhofer INNO-Grips Project Manager empirica GmbH
Europe, and attention is focused largely on emergency assistance? Isn’t it untimely to hold workshops about the implications of disruptive technology for innovation policy (see article on p. 03) while Europe is facing economic and social disruptions of a much greater magnitude?
Dear Readers, The European Union is facing a severe economic and financial crisis. Publicsector debt is challenging the stability of several member states, while unemployment in many places continues to rise. National governments and the EU have worked together in search of a response, with stimulus packages to overcome the financial crisis of 2008, and continuing attempts to resolve the underlying economic problems to regain and reinforce competitiveness of European economies. In short: the scenario for the European economy is difficult and requires the courage and determination to advance ambitious structural reforms. One may ask whether this is really the right time to think about innovation policy. Can we afford discussing ‘academic’ issues such as the impact of social attitudes to innovation (see article on p. 07) while financial imbalances are growing in
The point is: it would be short-sighted not to reflect on innovation in this situation. From a longer-term perspective, the only way for Europe to cope with its huge challenges and, step by step, recover from the crisis, is to be a global innovation leader. It is not by coincidence that those countries which are less seriously affected by the economic crisis – for instance Sweden, Denmark, Germany and Finland – are those which are commonly seen as strong innovators, with a worldclass innovation system in place. In fact, these four countries are identified as the innovation leaders by the EU’s Innovation Union Scoreboard (IUS) 2011. An article in this newsletter provides some information about the methods for benchmarking innovation performance, and compares the approach taken by the IUS with that of a recent US study (see p. 10). Admittedly, it would be simplistic to suggest that the capability for innovation
is the sole factor in developing economic strength and providing for social wellbeing. Other important considerations include the quality of systems of governance, the provision made for education, and cultural attitudes – including attitudes towards corruption and nepotism. But the more a country possesses of these virtues, the better it will perform, and, in turn, will reinforce its strengths. This INNO-Grips newsletter is a modest contribution to the objective of encouraging the virtuous circle of a strong innovation culture in Europe. We will need this culture to overcome the vicious circle of debt and unemployment which burdens Europe so heavily these days.
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LEAD ARTICLE
INNO-Grips discusses Christensen’s framework from a policy perspective
Disruptive innovation: implications for competitiveness and innovation policy A new INNO-Grips policy brief discusses the implications of disruptive innovation for effective inno vation policy design. The disruptive innovation framework, which was initially introduced by Clayton M. Christensen in his bestseller “The Innovator’s Dilemma” (1997), has been influential in management and business strategy literature; however, there has so far been hardly any discussion as to whether disruptive innovation requires specific responses in innovation policy.
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An innovation is called ‘disruptive’ if it has a significant impact on a market and on the economic activity of firms in that market. Thus, the concept focuses on the business impact of innovations as opposed to their mere novelty. Harvard Business School professor Clayton M. Christensen, the intellectual father of the concept, had observed that incumbents frequently miss out on new waves of innovation, with the consequence that new entrants take over much or all of their business in the respective market. He analysed the reasons and concluded that the management and business techniques that work in ‘stable’ business conditions may not be
appropriate to address challenges posed by disruptive technologies. For instance, conventional market research which focuses on key customers and their current needs may fail to correctly indicate the future demand and potential for newly emerging technologies. Do we need a special innovation policy for promoting disruptive innovations? INNO-Grips used Christensen’s framework to discuss innovation trends in four industries (chemical, automotive, tourism and transport) in terms of their disruptive
impact, and focused on the implications for innovation policy. The guiding question was: should innovation policy pay specific attention to disruptive innovation trends and, if so, how? “We found neither clear evidence for the need nor an opportunity for a specific ‘disruptive innovation policy’ intervention,” says Hannes Selhofer from empirica, who coordinated the work on the policy brief. “This has to do with the long term nature of disruptive technology developments: it can take 10-20 years from the invention of a new technology to its widespread deployment in products and services. This
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Exhibit: Sector case studies on disruptive innovation in the INNO-Grips policy brief Sector
Areas with highest disruptive innovation potential
Policy implications & recommendations
Chemical industry
• Process intensification
• Europe must take pro-active approach to maintain its role as an innovation leader, in particular in cutting-edge domains
• Substitutes for non-renewable substances in the feed stock • Innovation in advanced materials • Nanotechnology
• Encourage large scale, crosssector innovation activities • Lead a debate about risktaking in Europe • Ensuring access to raw materials and support research on substitutes
Automotive industry
• Disruptive technology: electric vehicles • Disruptive consumer behaviour: changing lifestyles could lead to a new mobility paradigm with reduced importance of car ownership
• Depends on the scenario with regard to the deployment of electric cars; if they are broadly accepted: • New dependencies on rare earths (instead of oil) – support research on alternative solutions (e.g. magnet-free electrical engines) • Promoting the development of electric vehicles • Encourage new mobility concepts (“mobility as a service”)
Tourism
• Dynamic trend towards booking tourist services on the internet • Low-cost airlines
• Create positive framework conditions for European tourism companies to adopt innovations • Some implications for competition policy (due to shifts in negotiating power between operators and new internet intermediaries)
Transport & logistics
• New e-services • Emergence of new players and new alliances
• Stimulate higher ICT expenditure through fiscal actions • Improve ICT skills by reassessing education and training systems • Better coordination of initiatives for disseminating technology solutions
is a challenge for any policy interventions in favour of specific technologies.” In fact, critics of the disruptive technology framework point out that the approach works best with hindsight in understanding developments and their impact, but is less helpful as an instrument to make predictions about the scope and time when the impact of a new technology will unfold. The authors of the policy brief (Ref. 1) recommend that the strategic response of economic and innovation policy should consist in creating positive framework conditions for innovation in Europe, irrespective of whether innovations will be incremental or disruptive in their impact.
The overriding objective should be to strengthen the general capabilities for innovation. “Good, systemic innovation policy will also work for areas with a disruptive potential”, says Selhofer. However, the authors point out some specific implications for each of the four industries that the policy brief looked at (see Exhibit). Product innovation vs. business model innovation The policy brief also shows that ‘disruptive innovation’ can mean fundamentally different things in different industries. In services (such as tourism and transport), disruptive innovations are typically linked
to new business models that have been made possible by innovative uses of technologies provided by other sectors, notably ICT. The implications for inno vation policy here are therefore different from those relating to manufacturing and, in particular, to high-tech sectors, where innovation is mostly linked with intensive RTD. The cross-sectoral nature of disruptive innovations A common feature of many disruptive technologies is that their development has required expertise – both technological and market-related – from different
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industries. For example, the development of battery electric vehicles requires close cooperation between the automotive and chemical industries (and other sectors as well). An implication for policy is to reflect on mechanisms that facilitate cross-sectoral cooperation and innovation processes. For instance, technology platforms which involve stakeholders from different industries could be a means to address this goal. The EU has already established European Technology Platforms as industry-led forums for stakeholders, charged with defining research priorities in a broad range of technological
areas. These platforms could provide a valuable baseline infrastructure for driving forward disruptive innovation. Dealing with potential conflicts of interest The policy brief warns that societal bene fits from disruptive technologies may not always coincide with business interests. For instance, disruptive break-through technologies in the chemical and automotive industry are seen as important developments in addressing global environmental issues such as advancing renewable
energies and reducing carbon emissions. However, the positive externalities from faster development and deployment of these technologies (which could be framed as the societal ‘business case’ for advancing them) may not coincide with the relevant industry’s business case for advancing them, at least regarding the time-scale of switching from the existing to the new technology. If a decision on policy to proactively accelerate the wide adoption of the disruptive technology is nonetheless made, it is necessary to discuss how the costs can be shared in a fair way among all stakeholders.
R e f e r e n c e s a n d f u r t h e r i n f o r m at i o n [1] The policy brief was prepared by an international team of innovation researchers consisting of Hannes Selhofer (empirica GmbH), René Arnold (Institut der deutschen Wirtschaft Köln Consult GmbH), Markus Lassnig (Salzburg Research GmbH) and Pietro Evangelista (Italian National Research Council). T h e f u l l s t u dy c a n b e d o w n loa d e d f r o m t h e INNO - G r i p s w e b s i t e :
http://www.proinno-europe.eu/innogrips/innovation-policy-briefs
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Disruptive Innovation – Implications for Innovation Policy
Disruptive innovation in the chemical industry:
interview with Professor Michael Dröscher, Chemie.NRW Professor Dr. Michael Dröscher is adjunct professor for macro molecular chemistry at the University of Münster and manages the cluster CHEMIE.NRW. He is also currently vice president of the German Chemical Society. He worked in the chemical industry for 28 years and retired from his job as innovation manager of Evonik (formerly known as Degussa) in 2009.
Professor Dröscher, how important is innovation in the chemical industry? The answer lies in the position of the chemical industry in the value chain from basic feedstock to consumer products. Most products of the consumer industry, from household goods, through medical appliances or electronic devices to automotive parts, could only be developed on the basis of materials produced by the chemical industry. But product innovation in the chemical industry is often visible only in these consumer products. We can say that chemical problem-solving expertise is needed now more than ever, so that everybody can have clean air, safe water, healthy food, reliable medicine, and environmentally friendly products, and so that the use of materials and energy production can become more sustainable. How can innovations originating in the chemical industry have a disruptive impact? Can you give some examples? As examples I could mention new poly carbonates which became the basis for optical storage media. Liquid crystals made flat-display technology possible. A new step in display technology is now being brought about by organic light emitting diodes. Inorganic and organic light emitting diodes are also the key materials for new lighting devices. To build low-weight
automobiles you need organic composite materials and for electricity-based mobility you need batteries with higher storage capacities and longer lifetimes.
important factor is manpower, the scientists, engineers and marketing people who have ideas and are able to transfer ideas into innovations.
The European chemical industry has been an innovation leader. What are the critical success factors for European companies to maintain this strength in the future, in particular in cutting-edge domains with a high disruptive potential?
How can innovation policy best support chemical companies in staying innovative and competitive? Do you have any recommendations for the European Commission or Member States?
Innovation does not come purely through intuition; it is hard work and needs significant investments in manpower and assets. Typically, a speciality chemical company will spend 2.5% of turnover on RTD to defend a leading position. Basic requirements are strong competences in the fields of activity and a well-developed RTD strategy, as well as an innovation management structure with strong support from the company board of directors and business managers. Knowledge is key – whether from own sources, or from co-operation with academia. Open innovation has become an important factor for success, as much for academia as for companies from the value chain involved. System integration opens insights in the value chain and presents new business opportunities. Highly professional management of intellectual property is essential. And the most
To stay competitive we need a well educated workforce, from technicians to scientists. We need support of applied research, but also wide basic science to open up new fields. Good ideas in an early stage need more support, such as venture capital to bridge the ‘valley of death’ between invention and innovation. The European Union and the Member States can support public-private partnerships across value chains, and can also create a political framework which is open to innovation and does not block it. To secure knowledge and to defend positions, we also need a European patent. We are still in a leading position but we have to fight hard to maintain it against strong competition from the Far East.
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INNO-Grips analyses the impact of social and cultural factors on innovation
Social attitudes to innovation and entrepreneurship: cultural values have an impact on entrepreneurial activity “Entrepreneurship” is possibly one of the most important drivers of innovation. It is governed in large part by attitudes to risk taking and receptiveness to new ideas, and there are considerable cultural differences in this respect between countries. A recent INNO-Grips study, conducted by UNU-MERIT, undertook the challenging task of analysing empirically the impact of social and cultural factors on innovation activity.
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Social and cultural attitudes – and their economic effects – are possibly the aspects of innovation that are the most difficult to measure. The lack of adequate data limits our understanding of drivers and barriers to innovation and, consequently, the development of innovation policies that promote entrepreneurship and the demand for innovative products. The INNO-Grips study on “Social attitudes to innovation and entrepreneurship” addressed this challenge. It compared how social attitudes influence entre preneurship and the demand for inno vative products in Europe and other major economies, and it suggests strategic responses for innovation policy.
The influence of national cultures on innovation attitudes As a first step, the study team investigated the influence of national culture on innovation adoption. They used Hofstede’s data and concept of national cultural dimensions (“power distance”, “individualism”, “masculinity” and “uncertainty avoidance”) and analysed empirically to what extent these dimensions correlated with attitudes to innovation. For example, they explored whether citizens living in cultures which lean more towards individualism (rather than collectivism) were more attracted by innovative products.
The statistical analysis found that differences in cultural values are indeed correlated with differences in the probability that an individual is attracted to innovative products and services. In particular, in countries with a less egalitarian attitude (high degree of “power distance”) and which are, in Hofstede’s terminology, characterised by a low degree of masculinity and uncertainty avoidance, it is more likely that people are attracted to inno vations. However, the regression results also showed that educational attainment, age, gender and the living environment were more powerful predictors of the attraction of innovations. Factors influencing attitudes to entrepreneurship Using data from the Global Entrepreneurship Monitor (GEM) and the Eurobarometer Entrepreneurship Survey (EES), the study then analysed factors influencing entrepreneurial activity as well as social attitudes to entrepreneurship. GEM, for example, includes several questions on the perceived attitude to entrepreneurship, such as whether the interviewee believes that most people in his/her country consider starting a new business a desirable career choice. EES also includes questions that can be interpreted as social attitudes, for instance what interviewees think about entrepreneurs.
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// Social attitudes to innovation and entrepreneurship
The study finds that several factors positively contribute to developing entrepreneurial activity. For instance, higher educational attainment in general will promote entrepreneurship, as well as growing up in a family where one or both of the parents were self-employed. Entrepreneurs seem to have a higher esteem for their own activity than nonentrepreneurs, with the majority seeing entrepreneurship as the basis of wealth creation and job creation. More than half of non-entrepreneurs, by contrast, believe than entrepreneurs only think about their own wallet and exploit other people’s work. Entrepreneurs are not a homogeneous group. The study differentiated between entrepreneurs who started a business out of opportunity and those who did so out of necessity. Opportunity-driven entrepreneurs were found to be more likely to assert that their school education made them interested in becoming an entrepreneur and less likely to think that entrepreneurs exploit other people’s work. They also have a much higher preference to be self-employed. Interestingly, those who start a business out of necessity are more likely to have received higher education.
that may be brought by an innovation is clearly the main driver of the strongest form of resistance – opposition. Therefore, risk-reduction strategies are crucial in diminishing consumer resistance towards innovation. This is important, as conventional demand-side strategies to increase innovation adoption tend to emphasize the benefits of an innovation, but often fail to address the risk perception.
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changes in individuals’ attitudes will influence, in the long run, the wider social and cultural attitudes in that economy. The authors conclude that the European Commission could have a role in this context in three ways: as a catalyst (by collecting and disseminating good practices), as a platform provider for stakeholders to discuss issues, and as an enabler by mobilising the resources to improve entrepreneurial education in Europe.
Policy conclusions Measurement conclusions Entrepreneurial spirit is shaped by many factors, including the family environment and broader culture in which entrepreneurs grow up, the quality of their formal education, their working experience and their exposure to the media. Policy interventions in any of these areas are likely to have a two-stage effect: a direct effect, such as educational policies introducing entrepreneurship classes in schools, promoting change in attitudes in the short-run; and an indirect effect in which
The authors also conclude that existing surveys lack relevant questions and that more detailed questions are needed to measure the role of education and income. Questions on attitudes to entrepreneurship and innovation are now asked in separate surveys and it is recommended to cover them in one survey as the two are strongly related.
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Reasons for consumers resisting innovation The study also explored reasons for consumers to resist innovation. Resistance can result in postponing the adoption of an innovation, entirely rejecting it, or even opposing it (for instance by openly protesting against the adoption of new products or methods). There are functional barriers that lead to resistance, such as insufficient ease of use, high costs and risks, and psychological barriers, such as tradition and the image of an innovation. The authors concluded that throughout all types of resistance, risk plays an important role. The fear of harm and danger
T h e f u l l s t u dy c a n b e d o w n loa d e d f r o m t h e I NNO - G r i p s w e b s it e : Buligescu, B., Hollanders, H. and Saebi, T. (2012), „Social attitudes to innovation and entrepreneurship“, PRO INNO Europe: INNO Grips II report, Brussels: European Commission, DG Enterprise and Industry.
http://www.proinno-europe.eu/inno-grips-ii/workshop/workshop-no-4-entrepreneurship
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// Social attitudes to innovation and entrepreneurship
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Social attitudes to innovation and entrepreneurship
Using ‘social attitudes’ as a parameter for innovation research: Interview with Hugo Hollanders and
Bianca Buligescu, UNU-MERIT Hugo Hollanders and Bianca Buligescu from UNUMERIT – a research centre of Maastricht University (UM) – were two of the principal study authors. Hugo Hollanders is an economist with more than 15 years of experience in measuring science, technology and innovation. Bianca Buligescu has an interdisciplinary background with a focus on labour economics and quantitative analysis. What was, in your view, the most unexpected or interesting result of this INNO-Grips study? The complex nature of social attitudes has been a real challenge. Social attitudes and attitudes in general are not only economic concepts, we also needed insights from sociology and psychology to define and understand both attitudes to entrepreneurship and the demand for innovation. Attitudes are shaped by an individual’s environment; not only friends and relatives shape your attitudes, but also formal networks such as schools, work environment and culture. Another interesting result is the difference in types of entrepreneurs, those who become an entrepreneur because they see opportunities and those who become an entrepreneur out of necessity – such as when they lack employment alternatives. We believe that these two groups are differently affected by regulatory incentives and alternative employment conditions on the labour market. Future research should look into these differences in detail. Do you think there are any particular strengths or weaknesses of the European “cultural values” with regard to their impact on innovation and entrepreneurship?
Contact: h.hollanders@maastrichtuniversity.nl
The rates of entrepreneurship in Europe are, on average, lower than in the US, still among the leading economic powers, and China, one of the fastest growing emerging economies. These lower rates are partially the result of Europeans being more risk averse, avoiding risky activities. Consumers in Europe tend to avoid buying innovative but unfamiliar goods and services. Europeans are also less willing to start a new business as they are more afraid of the risk of failure, such as going bankrupt. Cultural values cannot be directly addressed by policy measures. Apart from the study’s policy conclusions summarised in the article: is there any specific recommendation you have for policy makers in the light of the study results? More evidence-based research is needed to understand the factors shaping social attitudes and the impact of these attitudes on entrepreneurship and inno vation across countries. For this we not only need more recent data (we only had one Eurobarometer survey in 2005 collecting data on the demand for innovation, and the last Eurobarometer survey collecting data on entrepreneurship was in 2009) but also more survey questions measuring
different social attitudes and their impact on the decision to start a business. The study team used data from the Global Entrepreneurship Monitor (GEM) and the Eurobarometer Entrepreneurship Survey (EES). Do you have any recommendation as to how the value of these or other data sources could be further improved for future research? Both the Eurobarometer and GEM should include a more precise measurement of educational attainment, personal income, and prior occupation and employment status. In order to properly measure the impact of attitudes on the choice of becoming an entrepreneur, questions on attitudes should be measured retrospectively (or the same sample of people should be monitored over time so that panel data can be analysed). For the Eurobarometer, which is funded by the EC, we need larger sample sizes that are comparable over time. Identical questions regarding the reasons for preferences to self-employment over becoming an employee should be asked to both types of people and should reflect the relative choice between gains and losses from making such a decision.
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// Benchmarking innovation performance
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Compound indicators are attractive for policy and media, but involve some challenges
Benchmarking innovation performance: different approaches in comparison Measuring and comparing different economies in terms of how innovative they are is a challenging task, because innovation has many facets. The common approach is to select a number of suitable indicators and then aggregate them into an overall index. This article introduces the leading European benchmark for innovation performance, the Innovation Union Scoreboard, and compares the approach and results with those of a recent US study which addressed a similar objective.
Complex socio-economic constructs such as education, welfare or innovation cannot be measured directly. However, for policy making, some quantitative (and thus comparable) information is needed, for instance to assess the status-quo, identify weaknesses, and evaluate whether progress has been achieved over time.
reverse process of breaking down the construct into dimensions takes place – the selected indicators are re-aggregated into a compound indicator (or ‘index’), which then, ideally, represents a model of the complex social or economic construct. This aggregation requires decisions on weighting and scales to be used.
Establishing a benchmark for such complex, multi-dimensional constructs basically consists of the following steps: first, the construct (for example ‘innovation’) must be broken down into its various dimensions which are specific enough that they can be represented by indi cators. Then, suitable indicators have to be selected for the measurement of each dimension. This requires considerations of data availability (or the effort to collect them, if not yet available). Finally, the
The pros and cons of compound indicators Among statisticians and researchers, there are conflicting views on the merits of compound indicators, particularly if they are highly aggregated. Central points of the criticism are the combination of data which do not have a common base, and that any weighting is necessarily arbitrary: “Composite indicators are based on sub-indicators that have no common
meaningful unit of measurement and there is no obvious way of weighting these sub-indicators.” (Ref. 1) In short, highly aggregated indices would mean adding apples and pears. Nonetheless, compound indicators have become very popular in policy and attract a lot of attention in the media, in particular if they involve country-rankings. One of their main strengths and merits is that they are an effective vehicle to initiate a debate about policy objectives among stakeholders. The PISA study is a good example to illustrate this. Although the results are challenged on several grounds, this benchmarking study has been an effective catalyst for initiating a stake holder consultation on educational policy in several countries.
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Exhibit 1: Summary Innovation Index of the Innovation Union Scoreboard 2011: EU Member States’ innovation performance (Ref. 2) 0,80
0,70
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Modest Innovators
Moderate Innovators
A similar case can be made for the European Innovation Union Scoreboard (IUS) in innovation policy. This bench marking index has been widely reported and is highly influential. For example, some EU Member States have linked their (new) innovation policy strategy with an explicit target to improve their relative position in the IUS. (Ref.3) The Innovation Union Scoreboard The IUS is the continuation (since 2010) of the former European Innovation Scoreboard (EIS). The objective of this benchmarking tool is to help monitor the implementation of the Europe 2020 Innovation Union flagship initiative, and to provide a comparative assessment of the innovation performance of the EU27 Member States and the relative strengths and weaknesses of their research and innovation systems.
Innovation Followers
Innovation Leaders
resources’, ‘research systems’ and ‘finance & support’. Firm activities capture the innovation activities at the level of the firm, grouped in three sub-dimensions: ‘firm investments’, ‘linkages & entrepreneurship’ and ‘intellectual assets’. Outputs cover the effects of firms’ innovation activities in two dimensions: ‘innovators’ and ‘economic effects’. The data for the 24 indicators are mostly taken from Eurostat statistics; a few indicators are based on other internationally
recognised sources (OECD, UN, Science Metrix / Scopus), as available at the time of analysis. An important note is that the data relate to actual performance in 2007 (1 indicator), 2008 (9 indicators), 2009 (3 indicators) and 2010 (11 indicators). As a consequence, the IUS 2011 does not capture the most recent changes in innovation performance or the impact of policies – however, this is often ignored when the results are discussed. The composite “Summary Innovation Index” (see Exhibit 1) is calculated as the unweighted average of the rescaled scores for all 24 indicators. Re-scaled scores are
The IUS benchmark 2011 consists of 24 indicators. These are grouped into three main dimensions (‘enablers’, ‘firm activities’ and ‘outputs’), each of which is further broken down into 2-3 sub-dimensions (8 in total). Enablers capture the main drivers of innovation performance external to the firm, covering three sub-dimensions: ‘human
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// Benchmarking innovation performance
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Exhibit 2: Benchmarking results of the Global Innovation Policy Index (four tiers, countries in alphabetical order) (Ref. 5) upper tier
upper-mid tier
lower-Mid tier
lower tier
Australia, Austria, Canada, Chinese Taipei, Denmark, Finland, France, Germany, Hong Kong, Japan, Netherlands, New Zeeland, Norway, Singapore, Sweden, Switzerland, United Kingdom, United States
Belgium, Cyprus, Czech Republic, estonia, Hungary, Iceland, Ireland, Israel, Lithuania, Luembourg, Malta, Portugal, Slovenia, South Korea, Spain
Brazil, Bulgaria, Chile, China, Greece, Italy, Latvia, Malaysia, Poland, Romania, Slovak Republic, South Africa, Turkey
Argentina, India, indonesia, Mexico, Peru, Philippines, Russia, Thailand, Vietnam
calculated by first subtracting the lowest score and then dividing by the difference between the highest and lowest score from among the sample. The rescaled score can thus take values from 0 to 1. Depending on their overall index, countries are grouped as either innovation leaders, innovation followers, moderate or modest innovators. The Global Innovation Policy Index In the United States, the Information Technology and Innovation Foundation and the Kauffman Foundation published the ‘Global Innovation Policy Index’ (GIPI) (Ref. 4) in March 2012. This follows a similar approach to the IUS. The benchmarking report assesses the effectiveness of the innovation policies of 55 countries based on 84 indicators, which are grouped into seven policy areas: (1) open and nondiscriminatory market access and foreign direct investment; (2) science and R&D; (3) openness to domestic competition and new firm entry; (4) intellectual property rights; (5) digital (ICT) policy; (6) government procurement; and (7) openness to high-skill immigration. Within each of the seven areas, there are several sub-areas. The seven areas were weighted (for the purposes of building a compound index) as follows: trade, science and R&D, and digital policies at 17.5% of the overall weight each; intellectual property protection and domestic competition at 15% each; government procurement at 10%; and high-skill immigration at 7.5%. Weighting was also used for the sub-areas. Countries’ ranks on the seven weighted core areas were then aggregated to produce an overall ranking reflecting the strength of their innovation policy
capacity. To do this, the raw scores for each of the 84 indicators were first standardised. Using these standardised scores, a weighted average score was calculated for each country (for each area and overall). The sample of countries was then grouped into four tiers. Countries are categorised as either upper tier, upper-mid tier, lowermid tier, or lower tier on each of the seven core areas as well as in the total aggregate index (see Exhibit 2). Tiers were calculated as four equidistant partitions between the resulting maximum and minimum scores. In contrast to the IUS, the GIPI does not show the results for individual countries within a tier. The data for the selected indicators are mostly taken from statistics of international organisations such as the World Bank, the OECD, the UNESCO and the World Economic Forum, and from US organisations such as the International Trade Commission.
Comparison While the technical approach for building an innovation index is quite similar, the IUS and the GIPI differ in how they have structured the domain and, consequently, in the selection of indicators. IUS focuses more on the actual outcomes of inno vation activities to assess the innovation performance of a country, while GIPI has a stronger focus on framework conditions and policies. While GIPI was a one-time effort, the IUS has the advantage that it is an annual benchmark with a set of core indicators that have been quite stable over the years. Thus it can be used to assess whether a country’s innovation performance is making progress or falling behind (acknowledging the limitations of an indicator-based benchmarking approach as discussed above).
References [1] “State-of-the-art Report on Current Methodologies and Practices for Composite Indicator Development”, prepared by Michaela Saisana and Stefano Tarantola and presented as background paper at the Inter-Service consultation of the European Commission (Brussels, 14 March 2002). See website Composite Indicators by the Joint Research Centre: http://composite-indicators.jrc.ec.europa.eu(...) [2] For more information see: http://ec.europa.eu/enterprise/policies/(...) [3] Austria, for example, said the goal of its new strategy for research, technology and innovation (launched in March 2011) was to move up from an “innovation follower” to the league of “innovation leaders” in the IUS. [4] The report can be downloaded from the website of the Information Technology and Innovation Foundation: www.itif.org/publications/(...) [5] For more information see: http://ec.europa.eu/enterprise/policies/(...)
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// International innovation policy news
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Renewed strategies, new programmes and evaluations
International Innovation Policy News INNO-Grips monitors international developments in innovation policy. A network of correspondents from more than 30 countries worldwide reports regularly about the launch of new initiatives and other relevant events in their country. Their news reports are published on the INNO-Grips website. This article features a selection of news from some of the countries covered.
Austria The Austrian Ministry for Transport, Innovation and Technology launched the “Market Bonus” initiative to support small and medium-sized enterprises (SMEs) in marketing an innovative product or service. SMEs receive a grant of € 10,000 for specific marketing activities, for instance for conducting market analysis, patent research, the development of attractive packaging solutions for the new product, developing marketing concepts, or establishing a distribution channel in the new market. (Ref. 1) Canada Following a comprehensive review of federal support for R&D by an expert panel, the Government of Canada is committed to a new approach to supporting innovation in Canada by pursuing active business-led initiatives that focus resources on better meeting privatesector needs. The review had concluded that Canada lags behind peer countries in
terms of overall innovation performance, including private-sector investment in research and development (R&D), and the commercialisation of research into products and processes that create high-value jobs and economic growth. Denmark The Danish Ministry of Science, Technology and Innovation has released an English version of the so-called CIM manual (“The Central Innovation Manual on Excellent Econometric Impact Analyses of Innovation Policy”), which describes requirements for advanced statistical impact analysis of policies. The purpose of the manual is to ensure quality of studies and to facilitate comparisons between different policies. The manual offers insights and guidelines to anyone interested in econometric impact analysis. (Ref. 2) Finland Tekes, the Finnish governmental agency for innovation, released a report on “The
Impact of Tekes and Innovation Activities 2012”. The report summarises the results of evaluation studies and international comparisons which involve activities that are governed by Tekes. The report concludes that Finnish companies receive little public funding in comparison to other European countries; nonetheless, the funding schemes are mostly effective, according to their evaluations, and have a significant impact on economic growth and innovation. The focus in recent years on young growth companies and energy technology is seen as a success. (Ref. 3) France France invests more than € 460 million to strengthen innovative IT research. In the framework of the “Investissements d’Avenir” funding scheme (“Future Investments”), collaborative research between industry and the public sector is rewarded in key industry sectors. Two new technology research institutes were recently awarded € 460 million to advance research in the internet of the future and
References [1] More information about the grant scheme is available at the website of the Austrian Research Promotion Agency (FFG): http://www.ffg.at/marktbonus [2] The CIM Manual can be downloaded from the website of the Danish Ministry of Science, Technology and Innovation: http://en.fi.dk/publications/2012/central-innovation-manual-on-excellent-econometric-impact-analyses-of-innovationpolicy-cim/Central-Innovation-Manual-on-Excellent-Econometric-Impact-Analyses-of-Innovation-Policy-CIM-2012-04.pdf [3] The report is available on the Tekes website: http://www.tekes.fi/en/document/55671/tekes_and_innovation_activities_2012_pdf
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// International innovation policy news
advanced systems engineering. Following a call for proposals, the label “Institut de Recherche Technologique” (I.R.T) was awarded to two research collaborations: the I.R.T. SystemX receives funding for software development for complex systems such as transport and energy grids and the treatment of security data; the I.R.T. B-COM deals with the infrastructure and content of the internet of the future. Germany The German government has published its “Federal Report on Research and Innovation 2012”. The comprehensive document (650 pages) provides a detailed account of Germany’s research and innovation system and the government’s policy objectives and measures in this field. (Ref. 4) The report is the government’s response to recommendations made by Germany’s Commission of Experts for Research and Innovation, which released its annual report for the year 2012 earlier this year. The Commission emphasised the importance of innovation to the German economy and made suggestions for policies to boost innovation, whilst discussing also the challenges and opportunities on the road towards future progress in this area. The Commission suggested targeting institutions of higher education and startup businesses, as well as amendments to the tax system and a gradual reorganisation of the demographics of the working population as measures that could boost innovation. (Ref. 5)
The German Cabinet has passed an Action Plan for the further implementation of the High-Tech-Strategy, focusing of ten “Future Projects”. These lighthouse projects are seen as critical to address and realise the main innovation policy objectives. A budget of € 8.4 billion has been allocated for the period 2012-2015 to implement the Action Plan. The Future Projects cover a broad field of topics, including carbon neutrality and energy efficiency in cities, substituting renewable energies for oil, individualised health services, independent living for senior citizens, sustainable mobility, and internet-based services for the economy. (Ref. 6)
weaknesses of entrepreneurs they have supported. (Ref. 7)
Italy
UK
A survey among major venture-capital funds in Italy found that, despite the economic crisis, financing for good entrepreneurial ideas is still available. The main reason that start-ups fail to reach the market, according to the survey, is a lack of managerial skills rather than a lack of capital. The “Start-up Numbers” survey was carried out between July and October 2011 by Startup Business, a network for innovation that manages a web platform addressing start-ups and spin-offs, and is among the ten major venture capital funds in Italy. These funds manage a total investment capacity of about € 960 million (including about € 530 million addressing the domestic market). The fund managers were asked about investment trends, selection criteria and strengths and
The UK government has announced its new Innovation and Research Strategy for Growth, which aims to boost creativity in small and medium sized enterprises (SMEs). As part of this strategy, over £ 100 million is to be invested, and closer cooperation is to be built between SMEs and institutions with business expertise. A major part of the budget will be used for the Technology Strategy Board, a semiindependent body supporting high-tech ventures in the UK. This investment will provide high-end enterprises with the credit and facilities necessary to develop new products. (Ref. 9)
References [4] The Federal Report on Research and Innovation 2012 can be downloaded from the website of the Federal Ministry of Education and Research: http://www.bmbf.de/pub/bufi_2012.pdf [5] Germany’s Commission of Experts for Research and Innovation Report 2012 is available online at: http://www.e-fi.de/fileadmin/Gutachten/ EFI_Gutachten_2012_deutsch.pdf [6] The Government Report on the Future Projects of the High-Tech Strategy can be downloaded from the website of the German Federal Ministry of Education and Research: http://www.bmbf.de/pub/HTS-Aktionsplan.pdf [7] More information about the survey (in Italian language): http://www.startupnumbers.com [8] The Governmental White Paper (full version, in Norwegian) is available at http://www.regjeringen.no/pages/37862379/PDFS/ STM201120120022000DDDPDFS.pdf [9] The “Innovation for Research Strategy for Growth Report” is available at the website of the UK Department for Business Innovation & Skills (BIS): http://www.bis.gov.uk/assets/biscore/innovation/docs/i/11-1387innovation-and-research-strategy-for-growth.pdf [10] The Global Innovation Policy Index report is available online at http://www2.itif.org/2012-global-innovation-policy-index.pdf
NORWAY A recently-released government White Paper defines new goals and priorities for Innovation Norway and SIVA, the two main innovation agencies of the government. The agencies are to focus their activities on supporting the following strategic objectives: (1) more Norwegian entrepreneurs and start-ups, (2) more companies going international and (3) more user-friendly governmental services for the private sector. (Ref. 8)
USA The Information Technology and Innovation Foundation (a Washington, D.C.-based think tank) and the Kauffman Foundation (a private, nonpartisan foundation that works with partners to advance entrepreneurship) have published the “Global Innovation Policy Index”. This benchmarking report assessing the innovation capacity of 55 countries ranks the USA in the highest tier possible for five of the seven core policy areas identified by the authors. The report highlights effective policies which countries are using to build their innovation capacity, and offers recommendations for improving performance (see article on “Benchmarking innovation performance” in this newsletter). (Ref. 10)
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// ABOUT INNO-GRIPS
INNO-Grips NEWSLET TER 05
About INNO-Grips This newsletter is an INNO-Grips publication. INNO-Grips (http://www.proinno-europe.eu/innogrips2) stands for “Global Review of Innovation Policy Studies”. It supports policy-makers in adopting appropriate responses to emerging innovation needs, trends and phenomena. It analyses framework conditions and barriers and drivers to innovation and innovation policy, and offers intelligence on international developments in these fields. INNO-Grips is part of the European Commission’s PRO INNO Europe portal (http:// www.proinno-europe.eu), a focal point for innovation policy analysis and cooperation. INNO-Grips has two strands of activity. One concentrates on innovation policy (this newsletter is part of this strand); the other conducts economic studies of framework conditions, barriers and drivers to innovation. The current implementation period (“INNO-Grips II”) runs until January 2013, in continuation of the activities of INNO-Grips I (2006-2010).
INNO-Grips policy briefs: Innovation policy and the business cycle: innovation policy’s role in addressing economic downturn (2010) (http://www. proinno-europe.eu/inno-grips-ii/innovationpolicybrief/policybrief-no-1-innovation-policy-and-business-cycle-innovatio) Policies in support of high-growth innovative SMEs (2011) (http://www.proinno-europe.eu/innogrips/ innovation-policy-briefs) Policies in support of service innovation (2011) (http://www. proinno-europe.eu/inno-grips-ii/innovationpolicybrief/ policy-brief-no-3-policies-support-service-innovation-0)
INNO-Grips innovation studies: Barriers to internationalisation and growth (2010) (http:// www.proinno-europe.eu/inno-grips-ii/workshop/ workshop-no-1-barriers-internationalisation-and-growth) Implications of climate change, resource scarcity and demographic developments (2011) (http://www.proinno-europe. eu/inno-grips-ii/workshop/workshop-no-2-implicationsclimate-change-resource-scarcity-and-demographic-d) Open innovation in Europe: effects, determinants and policy (2011) (http://www. proinno-europe.eu/inno-grips-ii/workshop/ workshop-no-3-exploring-potential-open-innovation)
Disruptive innovation: implications for competitiveness and innovation policy (2012) (http://www.proinno-europe.eu/ inno-grips-ii/innovationpolicybrief/policy-brief-no-4disruptive-innovation-implications-competitive)
Social attitudes toward entrepreneurship and innovation demand (2012) (http://www.proinno-europe.eu/inno-grips-ii/ workshop/workshop-no-4-entrepreneurship)
Policies promoting innovation in the public sector (forthcoming – 2012)
Organisational and marketing innovations: drivers of growth? (forthcoming – 2012)
New trends in innovation policy (forthcoming – 2012)
The role of multinational companies and supply chains in innovation (forthcoming – 2012)
INNO-Grips workshops (recent / forthcoming): 19th January 2012, Brussels: Social attitudes toward fostering entrepreneurship and innovation demand
25th September 2012, Brussels: Organisational and marketing innovations: drivers of growth?
24th January 2012, Brussels: Disruptive innovation - implications for competitiveness and policy
December 2012, Brussels: The role of multinational companies and supply chains in innovation (date to be confirmed)
19th June 2012, Vienna: Policies supporting innovation in public service provision
November/December 2012, Helsinki: New trends in innovation policy (date to be confirmed)
The INNO-Grips policy analysis and monitoring is carried out by empirica GmbH, Bonn (http://www.empirica.com) and ICEG European Center, Budapest (http://www.icegec.hu), with support from Institut der deutschen Wirtschaft Köln Consult GmbH, Cologne (http:// www.iwconsult.de), based on a service contract with the European Commission, DG Enterprise and Industry, running until the end of 2012.
INNO-Grips NEWSLET TER JUNE june 2012
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Innovation
Policy News05 The INNO-Grips Newsletter
Imprint This INNO-Grips newsletter has been prepared by empirica Gesellschaft für Kommunikationsund Technologieforschung mbH, Oxfordstr. 2, 53111 Bonn, Germany, on behalf of the European Commission, Enterprise and Industry Directorate General. Editors: Hannes Selhofer (empirica); Peter O’Donnell Design and Layout: KITZ.KOMMUNIKATION GmbH Werbeagentur, Bonn © European Communities, 2012. Reproduction is authorised provided the source is acknowledged.
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