OECD Innovation Strategies – Part 3

Non-R&D expenditures are sometimes more important for innovation than R&D, and many of the countires with the highest proportion of successful innovators also have the highest propensity to engage in non-R&D innovation spending. This indicates the importance of a broad view of innovation inputs. New results from innovation surveys show that in most countries, more than a quarter of innovating firms introduced new products or processes without performing R&D. Moreover, a significant share of these non-R&D performing firms introduced product innovations that were first on their markets. Thus, non-R&D performing firms are able to develop new products or processes with an important element of novelty.

The complexity and costs of engaging in innovation – in particular at the frontier – continue to increase. Some innovations are realized through the convergene of different fields and technologies (e.g. social sciences, microelectronics, engineering and life science technologies). Such innovations promise new added value but are inherently risky, since business models are uncertain, cost are high and new potential competitors emerge in a very fluid business environment. After decades of trade liberalization, markets have become more globalized, opening new opportunities as well as intensifying the level of competition. Some product life cycles have shortened or are under pressure as a result of more intense and global competition and continued technological progress, and companies are forced to innovate more quickly and develop products and services more efficiently.

As a rsult of these trends, firms feel the need to partner to share costs, find complementary expertise, gain access to different technologies and knowledge and collaborate as part of an innovative network. These networks are increasingly global and call for individuals and institutions to take more “open” perspective on the innovation process, in which collaboration and competition coexist.

Large firms appear significantly more likely to collaborate on innovation than small and medium-sized enterprises. This may reflect the higher rate of new product development in large firms as well as easier access to partners and more resources to engage in such relations. In hte same way, SMEs which are part of a group tend to collaborate more frequently on innovation than independent ones, although still less than large firms.

While companies traditionally seek to retain their core capabilities (in technology and markets) and develop them internally to the greatest extent possible, open innovation may be a faster, less risky alternative to in-house development, particularly when the objective is to diversify in terms of technology and/or markets.

Brazil, China and South Africa have reduced the share of their patents involving international co-invention over the past decade, which may be further indication that they are strengthening their domestic technological capabilities. 

The challenge for governments is to tap into and exploit these global networks to access new knowledge and markets while generating value locally. Given the fluidity with which people and firms can move, this is increasingly difficult. People and firms are attracted or deterred mainly by local factors.

Location matters for innovation and some regions are becoming centers of innovation.

Drivers of economic change, particularly globalization and technological advances, are not necessarily “flattening” the world economy. In addition, some innovators have narrowed their focus to the areas in which they believe they have a competitive advantage. Instead of “flat”, the landscape of innovation is increasingly “spiky”, with specific actors specializing in particular aspects of the innovation process. This is leading to a growing role for regions. When firms can access production factors from anywhere across the globe, localized knowledge is still relevant.

Patterns of innovation performance change slowly, but some regions have emerged in recent years.

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About Andre

Experience Business Developer & Alliance Partner Manager with Strong Technical Background Dealing with Complex Solutions
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