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 well understood that many industrial and consumer products are developed by users, and that many innovations developed at private cost are freely shared. New statistical indicators will empower policymakers to take advantage of the latest research findings in their innovation policymaking, and will enable them to benefit from improved measurement of resulting policy impacts. In this paper, we report upon a pilot project in which a novel set of statistical indicators were deployed in a 2007 survey of 1,219 Canadian manufacturing plants. The plants 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 of these innovations could be reliably collected, and that novel findings important to policymaking would result. One such finding: About 20% of the user-innovators surveyed 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. Since cost-free sharing of innovations is understood to result in greater social welfare than licensing for a fee, innovation rates being equal, this finding has important public policy implications. Current government innovation policies tend to favor and even to subsidize the obtaining of intellectual property rights as a means of encouraging innovation. If a significant fraction of user-innovators in the economy are already freely revealing their innovations - despite the availability of intellectual property grants - perhaps intellectual property rights policies should be reexamined. We propose that improved versions of the novel statistical indicators piloted here should be integrated into official statistics so that user innovation, and related matters such as voluntary spillovers of innovation-related information, can be better monitored, better understood, and better managed.