Measuring user innovation

A new working paper examines the prevalence — and policy implications — of innovations that come from technology users.

What if government innovation statistics measured not only proprietary innovations like patents -- but also innovations that are developed by users and sometimes freely shared?  That's a question raised by a new working paper by Fred Gault, a visiting fellow at the International Development Research Centre, and Eric von Hippel of the MIT Sloan School. Their new paper looks at the question of the prevalence of innovation by users -- and its policy implications.

The working paper describes a survey of 1219 Canadian manufacturing plants that had been identified as "user-innovators" -- in that they used advanced manufacturing technologies and either modified the equipment for their own use or developed their own equipment. Interestingly, the researchers found that the user innovation projects were not, on average, trivial: The average technology modification project cost more than 600,000 Canadian dollars, while  the average new technology development project cost close to 1 million Canadian dollars. 

Nonetheless, 17.3% of the companies that modified the technologies and 19% of those that developed new technology equipment shared their process innovations with other firms or institutions -- often for no charge. (The most common reasons given for sharing an innovation were to enable a supplier to build a more suitable product or to gain feedback and expertise.)

The authors argue that such innovation-sharing is not adequately measured in current economic statistics -- and is thus frequently overlooked in public policy, which focuses more on enabling intellectual property protection.