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); andproducts ‘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.