Innovation and Employment

Innovation and Employment

Process versus Product Innovation

Charles Edquist, Leif Hommen and Maureen McKelvey

Which kinds of growth lead to increased employment and which do not? This is one of the questions that this important volume attempts to answer. The book explores the complex relationships between innovation, growth and employment that are vital for both research into, and policy for, the creation of jobs.

Appendix A: Defining and measurning product and process innovations

Charles Edquist, Leif Hommen and Maureen McKelvey

Subjects: economics and finance, economics of innovation, industrial economics, innovation and technology, economics of innovation


PART IV APPENDICES 21/5/01 2:07 pm Page 3 Appendix A Defining and measuring product and process innovations It is now widely accepted that a useful distinction between product and process innovation can be made, following Schumpeter’s (1911: 66) original definitions. However, this idea still remains controversial in some circles (Archibugi, Evangelista and Simonetti, 1994). Archibugi et al. argue that a major problem is diversity of definitions. They conclude that achieving greater clarity and consistency within clearly specified ‘single’ definitional approaches will be the most useful way of improving the measurement and analysis of product versus process innovation. These authors base their argument that the operational distinction between product and process innovations remains elusive on a review of the different definitions that have been used for this purpose. (These are identified below.) Their review is combined with an empirical test of ‘variation in the number of product and process innovations, according to the definition adopted’ (ibid.: 7).1 Archibugi et al. identified several definitions distinguishing product and process innovations. These were simultaneously operationalized and applied to a database capable of accommodating this operation. Most (96.9 per cent) of the innovations examined were found to occupy a ‘grey zone’ between the categories of product and process innovation. In other words, for 96.9 per cent of the innovations, their classification into one or the other of these two categories was an arbitrary matter. The ‘grey zone’ found by Archibugi et al. is produced by differences between the various methods of classification. The...

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