The prevalence of user innovation and free innovation transfers: Implications for statistical indicators and innovation policy

Statistical indicators have not kept pace with innovation research. Today, it is wellunderstood that many industrial and consumer products are developed by users, and thatmany innovations developed at private cost are freely shared. New statistical indicatorswill empower policymakers to take advantage of the latest research findings in theirinnovation policymaking, and will enable them to benefit from improved measurement ofresulting policy impacts.In this paper, we report upon a pilot project in which a novel set of statisticalindicators were deployed in a 2007 survey of 1,219 Canadian manufacturing plants. Theplants all developed or modified “advanced” process technologies for in-house use.Responses to the survey showed that data on both user innovation and the transfers ofthese innovations could be reliably collected, and that novel findings important topolicymaking would result. One such finding: About 20% of the user-innovatorssurveyed reported transferring their innovations to other users and/or equipment suppliers– and the majority of these at least sometimes did so at no charge to recipients. Sincecost-free sharing of innovations is understood to result in greater social welfare thanlicensing for a fee, innovation rates being equal, this finding has important public policyimplications. Current government innovation policies tend to favor and even to subsidizethe obtaining of intellectual property rights as a means of encouraging innovation. If asignificant fraction of user-innovators in the economy are already freely revealing theirinnovations - despite the availability of intellectual property grants - perhaps intellectualproperty rights policies should be reexamined.We propose that improved versions of the novel statistical indicators piloted hereshould be integrated into official statistics so that user innovation, and related matters suchas voluntary spillovers of innovation-related information, can be better monitored, betterunderstood, and better managed.