Measuring User Innovation: What Can a Standard Innovation Survey Tell Us?

Abstract

In this paper, we explore the amount and impact of firms that can be considered being user innovators. Using the Swiss Innovation Survey, we identify a sample of innovative firms that we explore with regard to their commitment to R&D. We thereby create a measure for informal innovation—that is, innovation not explicitly planned and budgeted—by identifying innovative firms that do not conduct any R&D. We argue that user innovators are the main source of such technological innovation and propose two methods to measure the usually hidden (informal) activities. First, by defining user innovators as non-R&D innovators, we show that they comprise 46% of all innovating firms. Furthermore, they represent more than one third of the economic impact induced by product and process innovations. A second method defines user innovators as over-innovators in an innovation function. Exploring the residuals, we show that user innovators in process technology comprise about 38% of process innovating firms and that they represent 37% of reduced costs in the economy. Furthermore, for these user innovators, 40% of costs reductions are found to be induced by users (within the firms). Thus, about 15% of the overall cost reductions in the economy comes from user innovation within firms.

JEL Classification: O31, C34, C35, C81