Erik Brouwer

The Non-Trivial Choice between Innovation Indicators

We discuss the strengths and weaknesses of five alternative innovation indicators: R&D, patent applications, total innovation expenditure and shares in sales taken by imitative and by innovative products as they were measured in the 1992 Community Innovation Survey (CIS) in the Netherlands. We conclude that the two most commonly used indicators (R&D and patent applications) have more (and more severe) weaknesses than is often assumed. Moreover, our factor analysis suggests that there is little correlation between the various indicators. This underlines the empirical relevance of various sources of bias of innovation indicators as discussed in this paper.

Employment Growth and Innovation at the Firm Level

We analyze the influence of innovation on growth rates of employment in 859 Dutch manufacturing firms over the period 1983–1988. Whereas the (growth of the) R&D intensity of firms has a slightly negative impact on employment, we find that firms with a high share of product-related R&D (as a proxi of R&D related to industrial activities in an early stage of the life cycle) experienced an above average growth of employment. The same holds for firms which directed their R&D towards information technology. Smaller firms have, ceteris paribus, substantially higher growth rates of employment than their larger counterparts. Against our expectations, R&D cooperation has no significant impact on employment growth. The same holds for activities in the fields of biotechnology and new materials.

Firm Size, Small Business Presence and Sales of Innovative Products: A Micro-econometric Analysis

In our generalized TOBIT analysis we identify a number of variables which have an impact on a firms innovation “output”. Among others we find that larger firms generally have a higher probability of selling some innovative products, although this probability increases less than proportionately with firm size. Given that a firm has some sales of innovative products, the share of such products in a firms total sales tends to be higher in smaller firms. Moreover, a strong small business presence in a sector seems to enhance imitative innovation but has no influence on “true” innovations, whereas market concentration has no influence on innovation “output” in whatever definition. We also find evidence of regional knowledge spill-overs. Furthermore, our results are consistent with Schmooklers hypothesis that the growth of demand enhances innovation. The outcomes about the impact of R&D collaboration and technology transfer on innovation remain ambiguous.

Determinants of Innovation: A Microeconometric Analysis of Three Alternative Innovation Output Indicators

Taking into account the shortcomings of R&D and patents mentioned in the introductory chapter, new indicators have been developed for the output side of the innovation process. Three of these new output indicators will be analyzed in this chapter, using data from The Netherlands. These indicators consist of: (i) a collection of new product announcements in 1989 from a large number of trade journals in The Netherlands; and (ii) the share of innovative products in a firm’s total sales, the latter being subdivided into: products ‘new to the sector’ (that is, not introduced earlier by a competitor); and products ‘new to the firm’ (that is, already known in the sector). While products new to the sector may be conceived of as being ‘true’ innovations, products new to the firm will often be based on imitation of products introduced earlier by competitors. These two new indicators were obtained by asking innovative firms to subdivide their total product range into three types of product, namely: (i) products essentially unchanged during 1990–2; (ii) products incrementally improved during 1990–2; and (iii) products radically changed or newly introduced during 1990–2. Firms were then asked to report the percentages of their 1992 sales which were related to each of the three categories of product named.