The impact of music downloads and P2P file-sharing on the purchase of music in Canada

This study measures the extent to which free music downloads, including the use of P2P file sharing networks, act as substitutes or complements to music purchase in markets for CDs and electronic delivered music (such as MP3). The analysis uses representative micro-data from the Canadian population. We find that those who participate in free music downloading and P2P file-sharing do not purchase more or less music compared with those who do not engaged in such activities, but that, indeed, very active file-sharers purchase more music relative to file-sharers who download fewer songs. Thus, the market substitution effect between freely acquired music and purchased music is smaller than the market creation and market segmentation effect from free music downloading. In essence, the behavioural incentives underpinning free music downloading are the effects of ‘unwilling to pay’ (market substitution), ‘hear before buying’ (market creation), ‘not wanting to buy whole album’ (market segmentation), ‘not available in the CD format or on electronic pay-sites (market creation)’

Innovation, skills and performance in the downturn: an analysis of the UK innovation survey 2011

The link between firms’ innovation performance and economic cycles, especially major downturns such as that of 2008-10, is a matter of great policy significance, but is relatively under-researched at least at the level of micro data on business behaviour. It is, for example, often argued that economies need to ‘innovate out of recessions’ since innovation is positively associated with improvements in productivity that then lead to growth and better employment (Nesta, 2009). The issues of how individual firms respond to downturns through their investment in innovation, and how this impacts on innovation outputs and ultimately business performance and growth during and after downturns, has been less studied because relevant data has not been readily available. The UK Innovation Survey (UKIS) 2011 now makes this possible. The UKIS 2011 with reference period 2008 to 2010 covers the downturn in economic activity generated by the global financial crash. The build-up of panels over the life of the UKIS also supports analysis of the longer-term interactions between innovation and the business cycle. This report analyses the last four waves of the surveys. Further, the latest survey includes questions on whether firms employ a specific set of skills, which adds materially to the ability to research the role of skills and human capital in innovation at the micro level

Innovation modes and productivity in the UK

This paper is motivated by the aim to develop appropriate indicators capturing modes of innovation by UK enterprises, examine how such innovation practices vary across regions and industries and explore the extent to which they have an impact on productivity. There is an emphasis on identifying and examining the relevance of non-technological innovation that builds on and extends previous research in this important area. Traditionally, measures of innovation have rested on single indicators such as patenting or R&D, supplemented, by product and process and process innovation outputs. More recently innovations in management, organisational and marketing areas are being brought into the picture and the relevant information collected by innovation surveys. Among indicators of innovation the distinctions between technological and non-technological innovations has often been loosely translated into either activities in manufacturing versus services, or into product and process innovations versus organisational and marketing innovations. While these simplifications of technological and non-technological innovation can be a practically useful, since data is readily available, they do not fully recognize that mixed modes of innovations are adopted by today’s firms; firms whose environments are characterised by increased competition, internationalisation and shorter product life cycles

The economics of accreditation

This paper is a report on a research project on the economics of accreditation in the UK. The main motivation and objective for the study is to have available a detailed analysis of how the accreditation system impinges on important aspects of economic life, such as innovation and business and economic performance. It aims to improve the general understanding of the benefits of using accredited conformity assessment and to help businesses make informed decisions when procuring conformity assessment and related services. It is also intended to be helpful to government by supporting evidence-based policy making in relation to accreditation and conformity assessmen

Connected innovation: an international comparative study that identifies mixed modes of innovation

This paper offers a new angle on innovation modalities by adopting a recently emerging approach towards identifying innovation typologies via exploratory data analysis techniques with the aim to tease out some underlying latent variables that represent coherent innovation strategies for groups of firms. Mixed modes of innovation include aspects of both user and open innovation, and are employed to inform on such concepts. The modes of innovation are developed by exploring micro-level innovation survey data across 18 countries. The contributions of the paper lie in (a) the identification of five core innovation modes that are found in almost all countries; and (b) examining – via regression analysis – the role of different modes in firm performance

Innovation dynamics and the role of infrastructure

This report shows how the role of the infrastructure – standards, measurement, accreditation, design and intellectual property – can be integrated into a quantitative model of the innovation system and used to help explain levels and changes in labour productivity and growth in turnover and employment. The summary focuses on the new results from the project, set out in more detail in Sections 5 and 6. The first two sections of the report provide contextual material on the UK innovation system, the nature and content of the infrastructure knowledge and the institutions that provide it. Mixed modes of innovation, the typology of innovation practices developed and applied here, is constituted of six mixed modes, derived from many variables taken from the UK Innovation Survey. These are: Investing in intangibles Technology with IP innovating Using codified knowledge Wider (managerial) innovating Market-led innovating External process modernising. The composition of the innovation modes, and the approach used to compute them, is set out in more detail in Section 4. Modes can be thought of as the underlying process of innovation, a bundle of activities undertaken jointly by firms, and whose working out generates well known indicators such as new product innovations, R&D spending and accessing external information, that are the partial indicators gathered from the innovation survey itself

Innovation and Performance in British-based Manufacturing Industries:Shaping the Policy Agenda

This paper analyses the relationship between business performance, R&D expenditures and innovation output. It utilises the second Community Innovation Survey (CIS2), a large-scale survey into firms’ innovation activities conducted in the UK by the DTI. We matched up CIS2 with performance data as derived from the FAME database, using the four year period after the survey. We find that many enterprises who claim to have produced innovation output, did not register any expenditures on formal R&D. Moreover, we find evidence that it is innovation output, the introduction of new or improved products and processes, which is correlated to productivity growth, not a high expenditure on R&D. The UK’s policy to support innovation via subsidising R&D expenditure may on the one hand fail to effectively target many firms who are successful innovators and on the other reward firms that engage in levels of R&D spending beyond the point where marginal social cost equals marginal social benefit. Our evidence strongly suggests that the key to supporting productivity growth in the economy as a whole is to develop policy initiatives that are able to facilitate product innovation directly

The impact of technological regimes on patterns of sustained and sporadic innovation activities in UK industries

This paper brings together ideas about technological regimes and looks at their influence on patterns of sustained or persistent innovation across UK manufacturing and services industries using two waves of the UK Community Innovation Surveys. It builds a link between technological regimes and Schumpeterian patterns of innovation, and tests these on the CIS databases. It creates a model using the variables within the technological regime to see whether these can explain sustained patterns of innovation. These variables include appropriability, cumulativeness, technological opportunity and closeness to the science base as well as enterprise size. The paper finds that strong appropriability, a high degree of cumulativeness, and closeness to the applied science base are strong predictors of sustained innovation activities. The results on technological opportunity are ambiguous. High tech manufacturing industries, i.e. chemicals and scientific instruments as well as some high tech services i.e. telecoms are more likely to register persistent innovation.

Patterns of Innovation in UK Industry: Exploring the CIS Data to Contrast High and Low Technology Industries.

This paper is divided into two parts. The first part is an examination of the OECD classification of industries into high, medium and low technology industries, to look at the basis for this classification and to use that as a benchmark with which to classify the Community Innovation Survey (CIS) data for the UK into similar groupings. The industries are ranked according to their research intensities and the rankings between the two datasets are compared. Some features of the UK rankings are highlighted and anomalies between the two datasets pointed out. The second part of the paper goes on to use the OECD classification into high, medium and low technology industries, applied to the CIS dataset, to contrast patterns of innovation in high technology industries with those in low technology industries. We build on the three types of innovation surveyed in the CIS, namely product, process and organisational innovation and contrast those types across high and low technology sectors. The expected relationship between high technology industries and product innovation holds - that enterprises tend to do more product innovation, the higher their research intensity. But process innovation does not conform to this pattern and there is not such a clear division between high and low technology industries. However the way they do process innovations differs with high technology industries more reliant on internal resources whereas lower technology industries tend to do it using external resources in collaboration with others. Organisational innovation is more complex, with certain types of innovation done as widely by lower technology industries as by the more research intensive industries. This supports the idea that all types of innovation should be considered, with the diffusion of ICTs making an impact across the technological spectrum of industries and showing up in various forms of organisational innovation

The role of internationalization as a determinant of innovation performance: an analysis of 42 countries

This paper analyses the impact of internationalization on the innovation performance of 42 countries. Innovation performance – the dependent variable – is measured by the number of triad patents and PCT applications that originate from a country. The following internationalization variables – independent variables – are used: inward and outward stock of FDI, exports and imports as well as the number of parent companies in a country. Information on patents and the internationalization variables, together with further explanatory variables, including the number of scientific articles in a country, the number of Internet users, the R&D intensity and the share of value added in services, are collected for the years 1990 to 2008. Regressions are performed for all countries together, and, then, for two groups of countries clustered on the basis of their GDP per capita. We estimate two linear models, one based on pooled data estimating the classic linear model, and one on panel data, estimating a fixed effects linear model. The values of our dependent variables lead by up to six years for two reasons: to account for the time that elapses between an invention and the recording of the patent statistic, and, to address at least to some extent, issues associated with endogeneity in our independent variables. The paper finds support for a positive impact of internationalization on countries’ innovation performance. Our analyses suggest that competing in international markets via outward FDI and exports increases the scope of learning and the need to innovate. We find evidence of a negative relationship between patenting and inward FDI as well as imports. We interpret our results to indicate that (a) the inward inflow of investment or products can be less innovation-intensive than a country’s domestic activities which would be the case for more advanced and innovation-active countries; or (b) that a country does not have a sufficient absorption capacity to benefit from inflows