CESIS Research Focus

 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.

Innovation efforts

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.

 Firm attributes

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.

Innovation milieu

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.

 Economy-wide outcomes

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.