The aim of CESIS’ research is to increase the understanding of how R&D and
other innovation efforts affect economic growth, analysed in a perspective of
innovation systems. In this context, the research also includes efforts to
develop methods to measure such growth effects. The ultimate goal is to
establish knowledge that can guide polices aiming at strengthening the relation
between R&D and growth.
In view of the above objective, the
research of CESIS focuses on the relation between innovation efforts at the firm
level and the innovation outcome of individual firms. As described in the figure
below, this approach presupposes that it is possible to control for the
influence of firm attributes as well as milieu factors of the firm, including
policy influences. Finally, the innovation outcome has to rely on a set of
interrelated and complementary indicators such as new products, sales of new
products, cost reductions due to process improvements, etc. The overall research
strategy is illustrated in the figure below.
In the study of innovation efforts, CESIS concentrates on observations at the
firm level, arguing that innovation is a result of an individual firm’s effort
in interaction with other actors in the firm’s local milieu and established
networks. Such efforts include R&D-spending, participation in scientific,
vertical and horizontal systems of innovation, gathering and absorption of
knowledge from local and global sources, import of knowledge embodied in
equipment and intermediaries, investment in human capital, and interactions in
public and private venture capital markets.
When analyzing innovation efforts, it
is essential to control for how firm attributes vary between individual firms.
Such attributes include firm size, corporate ownership and structure, industry
classification, R&D-staff, human capital, innovation experiences and other
knowledge assets, physical capital, established market network and location.
Important factors in the local milieu
of an innovative firm are clusters of suppliers and customers, consultancies and
competitors, universities and other research institutes and venture capital
actors. Together they form the basis of the firm’s innovation network. A
particular aspect of the environment is the firm’s accessibility to knowledge
sources. The knowledge intensity and skill profile of the local labour market
also constitute important features of the local milieu. The firm can also extend
milieu influences through networks within the company group to which the firm
belongs and by means of strategic alliances with other firms.
Innovation outcomes on the firm level
In order to detect the coupling
between innovation efforts and innovation outcomes, the strategy of CESIS is to
examine individual firms. With such a micro approach, it becomes possible to
consider a much richer spectrum of both innovation outcomes and innovation
inputs, which are less tractable on an aggregate level. On the micro level, one
can identify a set of non-pecuniary outcomes of innovation such as number and
type of new products, number and type of new patents and patent citations, and
number of new markets. Pecuniary outcomes comprise price of new products, sales
value associated with new products. At the firm level, we can also identify
innovation effects on sales, value-added, profit as well as cost components. All
these options are present because of the extensive micro-level data bases that
CESIS has built up and established during its initial research period.
Estimation of innovation effects on
the micro-level provides guidance for how to design aggregate models, which
relate innovation inputs and outputs. It is only in aggregate and systems models
that one can identify economy-wide consequences of innovation efforts. These
aggregate effects include innovation effects on the number of persons employed
in different sectors of the economy, the change in growth, domestic products,
but also the process of entry and exit in different industries of the economy.
One of the complicating factors in economy-wide analyses is the inter-sectoral
relations in the dynamics of the economy. This implies that policy
recommendations have to rely on a combination of micro based findings and
aggregate level approximations. Longitudinal studies and systems-analysis
approaches can add further understanding of economy-wide consequences of R&D
efforts and policy support to such efforts.