Innovation and Institutions

Innovation and Institutions

A Multidisciplinary Review of the Study of Innovation Systems

New Horizons in the Economics of Innovation series

Edited by Steven Casper and Frans van Waarden

Innovation and Institutions is an extensive elaboration on the make up of systems of innovation. It examines why some countries are more innovative than others, why national styles of innovation differ, and goes on to explore why some countries make radical innovations but fail to successfully market them, whilst others making incremental innovations have more commercial success.

Chapter 2: Problems of measuring innovative performance

Brigitte Unger

Subjects: economics and finance, economics of innovation, institutional economics, innovation and technology, economics of innovation, innovation policy


Brigitte Unger 1 INTRODUCTION AND SUMMARY This chapter provides first an overview of the literature on innovative performance. Section 2 shows the principal problems encountered when measuring innovative performance. What an innovation is, whether it can be observed as it happens and identified as such, whether it can be clearly separated from imitation and diffusion, and whether it can be measured without a theory are issues addressed in the beginning. Three types of innovation – product, process and organizational innovations – can be distinguished, which might have to be measured differently. Determinants of innovation in the economic literature are: 1. 2. Demand conditions (customers influence product innovations more than process innovations) Appropriability conditions (conditions to reap the benefits of the innovation and the capacity to take advantage of the response time of the competitor; intellectual property protection and learning increase this capacity) Sources of technological knowledge need inside absorptive capacities to use external knowledge Market structure, characteristics and strategy of the firm influence innovation 3. 4. The literature on national innovation systems is a first bridge between traditional economic approaches and institutional literature. Innovation can be measured in five ways: 1) through case study, as the early history of innovation studies of Riedel (1839) shows; 2) through trade journals and publications; these are called ‘literature-based indicators’; 3) through surveys with all the bias problems related to them; 4) through input indicators such as research and development expenditures; and 5) through output variables such as patents and sales of the product. The pros...

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