Towards a new understanding of innovativeness - and of innovation based indicators

Abstract

The aim of this paper is to contribute to a new start of measuring innovativeness and creativity within the business sector and thus to widen perspectives in analysing and promoting capabilities and processes that contribute to profitable firms and growth. Basically it is a technical paper arguing for a renewal of our toolbox of indicators for capturing knowledge formation in industry. It starts with a discussion of the original Schumpeterian concept of innovation; a concept which has no necessary connection to science or technological originality at all. What counts is not the science base but all professional creativity which can attract the market. This opens for a better understanding of the creative processes taking place in so called low-tech manufacturing sectors as well as in many service sectors, not the least those labelled Knowledge Intensive Business Services. The core section of the paper is devoted to a discussion of an alternative to the system of technology indicators used within the OECD and the EU. The authors argue for a family of five indicators all of which may be based on a small set of variables. Instead of compiling these indicators to a composite index - which is common practice within the EU - the paper suggests that using them together may capture the variety of innovativeness within and between sectors. Indices related to design intensity, technological intensity, skill intensity and innovation intensity are supposed to add to the more traditional R&D intensity in the work to capture different aspects of firms capabilities to innovate and to stay competitive. The suggested family of indices is finally tested on Norwegian data. Although they have been collected for other purposes the test reveals that the suggested system of indicators is capable to show the variety within sectors and between firms as regards knowledge formation and innovativeness. In fact, this limited test, already, provides a more diversified picture on the innovativeness of the business sector than what is provided by the conventional tools.