Contents. Acknowledgments
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1 Table of List of Tables and Figures Acknowledgments page xv xxvii 1 The Economics of Knowledge Creation Introduction Innovation: Crosscutting Themes The Nature of Innovation: Core Framework Heterogeneity of Innovation Regimes and the Environment Knowledge Externalities, Market Imperfections, and Diffusion The Economic Themes The Nature of Innovation Outputs The Nature of Innovation Inputs The Organization of the Study and Principal Findings The Innovation Survey Innovation Intensity The Sources of Knowledge Research and Development Effects of Innovation Innovation and Research and Development in Small Versus Large Firms Innovation Regimes and Type of Innovation The Use of Property Rights Multinationals and the Canadian Innovation Process Financing and the Cost of Innovation Technology, Joint Ventures, and the Transfer of Innovation 26 vii
2 Table of viii Strategic Capabilities in Innovative Businesses Firm and Industry Characteristics Associated with Innovation 27 2 The Innovation Survey Introduction Defining Innovation Measuring Innovation Understanding the Innovation Regime Background on the 1993 Canadian Survey of Innovation and Advanced Technology 38 3 Patterns of Innovation: Intensity and Types Introduction The Incidence of Innovation Types of Innovations Introduced Characteristics of Innovation Originality and Type of Innovation The Number of Innovations Introduced Features of Innovation Conclusion 59 4 Sources of Innovations Introduction Internal Sources of New Ideas Industry Differences in Internal Sources of Innovative Ideas Internal Sources of New Ideas by Industry Branch Combinations of Internal Sources External Sources of Ideas and Information for Innovation Industry Sector Differences in External Sources of Innovative Ideas Product Versus Process Innovators Spillovers, Market Transactions, and Infra-technologies Sources of New Technology Industry Sector Differences in Internal Sources of Technology External Sources of Ideas for New Technology Relationship Between Internal and External Sources of Technology Conclusion 91 5 Research and Development and Innovation Introduction Definitions: Expenditures on Research and Development Expenditures on Innovation 98
3 Table of ix 5.4 Research and Development Activity Frequency of Research and Development Organization of R&D Facilities Collaborative Research and Development The Valuation of Innovation Strategies by R&D Type Industry Differences in Research and Development Frequency of Research and Development Organization of Research and Development Other Research-Related Activities Patterns of Collaborative Agreements Differences in the Research and Development Characteristics of Innovative and Non-innovative Firms Distinguishing Innovative and Non-innovative Firms R&D Activity in Innovative and Non-innovative Firms R&D Differences Across Novelty Types Conclusion Effects of Innovation Introduction Changes in Organization of Production Brought About by Innovation in General Effect of the Most Profitable Innovation on a Firm s Demand, Share of the Market, Factor Costs, and Profitability Innovation and Outcomes Innovation and Sources of Reduction in Production Costs Innovation and Government Regulation Effect of Innovation on Employment and Skills of Workers Employment Effect Depends on the Type of Innovation Discriminant Analysis of Employment Effects Innovation and Export Sales Conclusion Innovation and Research and Development in Small and Large Firms Introduction Do Small Firms Suffer from an Innovation Gap? Sources of Innovations Research and Development Activity Frequency of Research and Development Organization of R&D Facilities Collaborative Research and Development The Link Between R&D and Innovation 175
4 Table of x 7.6 Impediments Associated with Innovation Conclusion Innovation Regimes and Type of Innovation Introduction The Definition of Innovation The Data How Prevalent Is Innovation? Types of Innovation Features of Innovation The Benefits of Innovation Internal Sources of Innovation Ideas External Sources of Innovation Ideas The Importance of R&D Activity Internal Sources for New Technologies External Sources of New Technologies Protection for Intellectual Property Impediments to Innovation What Happens to Workers in Innovative Firms? Conclusion The Use of Intellectual Property Rights Introduction Canada in an International Context Forms of Intellectual Property Protection Use of Intellectual Property Rights by Manufacturing Firms Operating in Canada Effectiveness of Intellectual Property Protection Overall Evaluations Canada/United States Comparisons Large Versus Small Firms Differences in the Use of Intellectual Property Protection by Innovative and Non-innovative Firms Distinguishing Innovative and Non-innovative Firms Intellectual Property Use and Innovativeness Innovation Differences Across Size Classes Intellectual Property Protection and the Characteristics of Innovations Industry Differences Industry Use of Intellectual Property Protection Industry Effectiveness of Intellectual Property Protection Multivariate Analysis of Intellectual Property Use and Effectiveness Conclusion 260
5 Table of xi 10 Multinationals and the Canadian Innovation Process Introduction Characteristics of Canadian and Foreign-Owned Firms: Size and Industry Differences Incidence and Organization of R&D Sector Differences Probabilistic Models of R&D Organization R&D Collaboration Partnerships Sources of New Ideas and Inspiration for Innovation How Important as Sources of Innovative Ideas Are Foreign Parents and Sister Companies of Foreign-Owned Firms? Internal and External Sources of Technology Transfer of Technology Impediments to Innovations Do Canadian-Owned Firms Innovate More or Less Than Foreign Affiliates? Do Foreign-Owned Firms Introduce Process Innovations More Often Than the Canadian- Owned Firms? Originality of Innovations The Number of Innovations Introduced Use of Intellectual Property Rights Effects of Innovation Do Foreign Affiliates Export More or Less Than Canadian-Owned Firms? The Impact of Innovation on Employment and Skill Requirements Ownership Versus Trade Orientation Conclusions Financing and the Cost of Innovation Introduction The Costs of Innovation Product-Process Innovation Cost Differences The Sources of Funds for Innovation Government Funding of Innovation Tax Credits Use of Tax Credits R&D Activity, Tax Credits, and Innovation Performance Conclusion The Diffusion of Innovation Introduction 349
6 Table of xii 12.2 Technology Transfer Agreements Characteristics of Technology Transfer Agreements Rights and Restrictions Associated with Technology Transfer Restrictions Attached to Technology Transfer Agreements A Probabilistic Model of Technology Transfer via Licensing Probability of Continuous Versus One-Time Transfers of Technology Participation in Joint Ventures and Strategic Alliances The Incidence of Joint Ventures and Strategic Alliances The Relationship Between R&D Collaboration, Joint Ventures, and Innovation Modelling the Probability of a Firm Using a Joint Venture Diffusion of Innovation The Users of Innovations Interindustry Flows of Innovations Conclusion Strategic Capabilities in Innovative Businesses Introduction Strategic Capabilities and Competencies Innovation and Technology Strategies Production Strategies Marketing and Product-Based Strategies Human Resource Strategies Specialized Management Strategies Conclusion Determinants of Innovation Introduction Empirical Model The Model Innovation Variable Explanatory Variables Estimation Procedures Regression Results Incidence of Innovation Patent Use Type of Innovation Novelty of Innovation Conclusion 423
7 Table of xiii 15 Summary Innovation Types The Impact of Innovation The Innovation Process Sources of Innovation The R&D Process Technology Acquisition Intellectual Property Rights Financing Complementary Strategies for Innovative Firms Heterogeneity Differences in Innovation Regimes Across Industries Differences in Innovation Regimes Across Firm Size Classes Differences in Innovation Regimes Across Novelty Types Differences in Innovation Regimes by Nationality 451 Appendix The Innovation and Advanced Technology Survey 455 A.1 Background 455 A.2 The 1993 Survey of Innovation and Advanced Technology 456 A.3 Respondents Guide: Survey of Innovation and Advanced Technology 484 References 491 Index 507
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