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Determinants of innovation and alternative innovation indicators

The European Commission, DG XII, has recently published a study aimed at validating new innovation indicators against established indicators, in order to improve the methodological evaluation of science and technology programmes in general, and to contribute to the Second Euro...
The European Commission, DG XII, has recently published a study aimed at validating new innovation indicators against established indicators, in order to improve the methodological evaluation of science and technology programmes in general, and to contribute to the Second European Report on Science and Technology Indicators, published in March 1998 (see RTD-News, RCN 9978).

The report takes as its starting point an expert discussion on innovation indicators and the choice of alternative indicators. This summary identifies the weak and strong points of various alternative indicators currently available, such as R&D, numbers of scientists and engineers, total innovation expenditure, patent and patent citation data, and new product announcement data.

The second part of the report presents a micro-econometric analysis of three alternative innovation output indicators which have recently been developed. These are:

- Sales of products "new to the firm";
- Sales of products "new to the sector";
- New product announcements in trade journals.

These new indicators are compared to indicators currently in use - R&D and patents - and then TOBIT and Count Data models are estimated, with the aim of identifying a number of variables which have an impact on a firm's score on innovation "output". Factors enhancing innovation according to these indicators include demand growth, regional location and R&D effort. Factors such as market concentration, technology transfer and R&D collaboration appear to have little impact on innovation output on all three definitions. The report also concludes that larger firms are more likely to innovate than smaller ones, but innovative smaller ones are more innovation intensive.
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