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- 1. Innovation and Training in New Firms ArchivedArticles and reports: 11F0019M2000123Geography: CanadaDescription:
Recent studies have demonstrated the quantitative importance of entry, exit, growth and decline in the industrial population. It is this turnover that rewards innovative activity and contributes to productivity growth.
While the size of the entry population is impressive - especially when cumulated over time - the importance of entry is ultimately due to its impact on innovation in the economy. Experimentation is important in a dynamic, market-based economy. A key part of the experimentation comes from entrants. New entrepreneurs constantly offer consumers new products both in terms of the basic good and the level of service that accompanies it.
This experimentation is associated with significant costs since many entrants fail. Young firms are most at risk of failure; data drawn from a longitudinal file of Canadian entrants in both the goods and service sectors show that over half the new firms that fail do so in the first two years of life. Life is short for the majority of entrants. Only 1 in 5 new firms survive to their tenth birthday.
Since so many entrants fall by the wayside, it is of inherent interest to understand the conditions that are associated with success, the conditions that allow the potential in new entrepreneurs to come to fruition. The success of an entrant is due to its choosing the correct combination of strategies and activities. To understand how these capabilities contribute to growth, it is necessary to study how the performance of entrants relates to differences in strategies and pursued activities.
This paper describes the environment and the characteristics of entrants that manage to survive and grow. In doing so, it focuses on two issues. The first is the innovativeness of entrants and the extent to which their growth depends on their innovativeness. The second is to outline how the stress on worker skills, which is partially related to training, complements innovation and contributes to growth.
Release date: 2000-12-08 - Articles and reports: 11F0019M2000122Geography: CanadaDescription:
This paper examines how several factors contribute to innovative activity in the Canadian manufacturing sector. First, it investigates the extent to which intellectual property right protection stimulates innovation. Second, it examines the contribution that R&D makes to innovation. Third, it considers the importance of various competencies in the area of marketing, human resource, technology and production to the innovation process. Fourth, it examines the extent to which a larger firm size and less competition serve to stimulate competition-the so-called Schumpeterian hypothesis. Fifth, the effect of the nationality of a firm on innovation is also investigated. Finally, the paper examines the effect of an industry's environment on a firm's ability to innovate.
Several findings are of note. First, the relationship between innovation and patent use is found to be much stronger going from innovation to patent use than from patent use to innovation. Firms that innovate take out patents; but firms and industries that make more intensive use of patents do not tend to produce more innovations. Second, while R&D is important, developing capabilities in other areas, such as technological competency and marketing, is also important. Third, size effects are significant. The largest firms tend to be more innovative. As for competition, intermediate levels of competition are the most conducive to innovation. Fourth, foreign-controlled firms are not significantly more likely to innovate than domestic-controlled firms once differences in competencies have been taken into account. Fifth, the scientific infrastructure provided by university research is a significant determinant of innovation.
Release date: 2000-03-07 - Journals and periodicals: 61-526-XGeography: CanadaDescription:
This study investigates the determinants of failure for new Canadian firms. It explores the role that certain factors play in conditioning the likelihood of survival - factors related to industry structure, firm demographics and macroeconomic cycles. It asks whether the determinants of failure are different for new start-ups than for firms that have reached adolescence, and if the magnitude of these differences is economically significant. It examines whether, after controlling for certain influences, failure rates differ across industries and provinces.
Two themes figure prominently in this analysis. The first is the impact that certain industry characteristics - such as average firm size and concentration - have on the entry/exit process, either through their influence on failure costs or on the intensity of competition. The second centres on how the dimensions of failure evolve over time as new firms gain market experience.
Release date: 2000-02-16 - 4. Differences in Innovator and Non-innovator Profiles: Small Establishments in Business Services ArchivedArticles and reports: 11F0019M2000143Geography: CanadaDescription:
This paper explores differences between innovative and non-innovative establishments in business service industries. It focuses on small establishments that supply core technical inputs to other firms: establishments in computer and related services, engineering, and other scientific and technical services.
The analysis begins by examining the incidence of innovation within the small firm population. Forty percent of small businesses report introducing new or improved products, processes or organizational forms. Among these businesses, product innovation dominates over process or organizational change. A majority of these establishments reveal an ongoing commitment to innovation programs by introducing innovations on a regular basis. By contrast, businesses that do not introduce new or improved products, processes or organizational methods reveal little supporting evidence of innovation activity.
The paper then investigates differences in strategic intensity between innovative and non-innovative businesses. Innovators attach greater importance to financial management and capital acquisition. Innovators also place more emphasis on recruiting skilled labour and on promoting incentive compensation. These distinctions are sensible - among small firms in R&D-intensive industries, financing and human resource competencies play a critical role in the innovation process.
A final section examines whether the obstacles to innovation differ between innovators and non-innovators. Innovators are more likely to report difficulties related to market success, imitation, and skill restrictions. Evidence of learning-by-doing is more apparent within a multivariate framework. The probability of encountering risk-related obstacles and input restrictions is higher among establishments that engage in R&D and use intellectual property rights, both key elements of the innovation process. Many obstacles to innovation are also more apparent for businesses that stress financing, marketing, production or human resource strategies.
Release date: 2000-01-25 - Articles and reports: 11F0019M2000127Geography: CanadaDescription:
In studies of business innovation, the term innovation process is used to describe (i) the array of sources and objectives that culminate in the act of innovation, (ii) the set of market effects that result from innovation, and (iii) the obstacles that firms encounter when pursuing innovation strategies. An examination of the innovation process is thus designed to bring about a more comprehensive understanding of the characteristics that innovative firms share, as well as of those characteristics that set innovators apart from other businesses. The Survey of Innovation, 1996 examined innovation in three dynamic service industries: communications, financial services, and technical business services.
This paper explores the principal findings to emerge from the Survey of Innovation, 1996. Two themes are apparent. In the first instance, many elements of the innovation process are common to all the service industries studied, such as an emphasis on product innovation, a strong customer orientation, and a commitment to service quality. Beyond these common elements, however, differences in competitive pressures across these industries serve to engender important differences in innovation strategies. Accordingly, much of what we can ultimately learn about the innovation process occurs at the industry level.
Release date: 2000-01-19
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- 1. Innovation and Training in New Firms ArchivedArticles and reports: 11F0019M2000123Geography: CanadaDescription:
Recent studies have demonstrated the quantitative importance of entry, exit, growth and decline in the industrial population. It is this turnover that rewards innovative activity and contributes to productivity growth.
While the size of the entry population is impressive - especially when cumulated over time - the importance of entry is ultimately due to its impact on innovation in the economy. Experimentation is important in a dynamic, market-based economy. A key part of the experimentation comes from entrants. New entrepreneurs constantly offer consumers new products both in terms of the basic good and the level of service that accompanies it.
This experimentation is associated with significant costs since many entrants fail. Young firms are most at risk of failure; data drawn from a longitudinal file of Canadian entrants in both the goods and service sectors show that over half the new firms that fail do so in the first two years of life. Life is short for the majority of entrants. Only 1 in 5 new firms survive to their tenth birthday.
Since so many entrants fall by the wayside, it is of inherent interest to understand the conditions that are associated with success, the conditions that allow the potential in new entrepreneurs to come to fruition. The success of an entrant is due to its choosing the correct combination of strategies and activities. To understand how these capabilities contribute to growth, it is necessary to study how the performance of entrants relates to differences in strategies and pursued activities.
This paper describes the environment and the characteristics of entrants that manage to survive and grow. In doing so, it focuses on two issues. The first is the innovativeness of entrants and the extent to which their growth depends on their innovativeness. The second is to outline how the stress on worker skills, which is partially related to training, complements innovation and contributes to growth.
Release date: 2000-12-08 - Articles and reports: 11F0019M2000122Geography: CanadaDescription:
This paper examines how several factors contribute to innovative activity in the Canadian manufacturing sector. First, it investigates the extent to which intellectual property right protection stimulates innovation. Second, it examines the contribution that R&D makes to innovation. Third, it considers the importance of various competencies in the area of marketing, human resource, technology and production to the innovation process. Fourth, it examines the extent to which a larger firm size and less competition serve to stimulate competition-the so-called Schumpeterian hypothesis. Fifth, the effect of the nationality of a firm on innovation is also investigated. Finally, the paper examines the effect of an industry's environment on a firm's ability to innovate.
Several findings are of note. First, the relationship between innovation and patent use is found to be much stronger going from innovation to patent use than from patent use to innovation. Firms that innovate take out patents; but firms and industries that make more intensive use of patents do not tend to produce more innovations. Second, while R&D is important, developing capabilities in other areas, such as technological competency and marketing, is also important. Third, size effects are significant. The largest firms tend to be more innovative. As for competition, intermediate levels of competition are the most conducive to innovation. Fourth, foreign-controlled firms are not significantly more likely to innovate than domestic-controlled firms once differences in competencies have been taken into account. Fifth, the scientific infrastructure provided by university research is a significant determinant of innovation.
Release date: 2000-03-07 - Journals and periodicals: 61-526-XGeography: CanadaDescription:
This study investigates the determinants of failure for new Canadian firms. It explores the role that certain factors play in conditioning the likelihood of survival - factors related to industry structure, firm demographics and macroeconomic cycles. It asks whether the determinants of failure are different for new start-ups than for firms that have reached adolescence, and if the magnitude of these differences is economically significant. It examines whether, after controlling for certain influences, failure rates differ across industries and provinces.
Two themes figure prominently in this analysis. The first is the impact that certain industry characteristics - such as average firm size and concentration - have on the entry/exit process, either through their influence on failure costs or on the intensity of competition. The second centres on how the dimensions of failure evolve over time as new firms gain market experience.
Release date: 2000-02-16 - 4. Differences in Innovator and Non-innovator Profiles: Small Establishments in Business Services ArchivedArticles and reports: 11F0019M2000143Geography: CanadaDescription:
This paper explores differences between innovative and non-innovative establishments in business service industries. It focuses on small establishments that supply core technical inputs to other firms: establishments in computer and related services, engineering, and other scientific and technical services.
The analysis begins by examining the incidence of innovation within the small firm population. Forty percent of small businesses report introducing new or improved products, processes or organizational forms. Among these businesses, product innovation dominates over process or organizational change. A majority of these establishments reveal an ongoing commitment to innovation programs by introducing innovations on a regular basis. By contrast, businesses that do not introduce new or improved products, processes or organizational methods reveal little supporting evidence of innovation activity.
The paper then investigates differences in strategic intensity between innovative and non-innovative businesses. Innovators attach greater importance to financial management and capital acquisition. Innovators also place more emphasis on recruiting skilled labour and on promoting incentive compensation. These distinctions are sensible - among small firms in R&D-intensive industries, financing and human resource competencies play a critical role in the innovation process.
A final section examines whether the obstacles to innovation differ between innovators and non-innovators. Innovators are more likely to report difficulties related to market success, imitation, and skill restrictions. Evidence of learning-by-doing is more apparent within a multivariate framework. The probability of encountering risk-related obstacles and input restrictions is higher among establishments that engage in R&D and use intellectual property rights, both key elements of the innovation process. Many obstacles to innovation are also more apparent for businesses that stress financing, marketing, production or human resource strategies.
Release date: 2000-01-25 - Articles and reports: 11F0019M2000127Geography: CanadaDescription:
In studies of business innovation, the term innovation process is used to describe (i) the array of sources and objectives that culminate in the act of innovation, (ii) the set of market effects that result from innovation, and (iii) the obstacles that firms encounter when pursuing innovation strategies. An examination of the innovation process is thus designed to bring about a more comprehensive understanding of the characteristics that innovative firms share, as well as of those characteristics that set innovators apart from other businesses. The Survey of Innovation, 1996 examined innovation in three dynamic service industries: communications, financial services, and technical business services.
This paper explores the principal findings to emerge from the Survey of Innovation, 1996. Two themes are apparent. In the first instance, many elements of the innovation process are common to all the service industries studied, such as an emphasis on product innovation, a strong customer orientation, and a commitment to service quality. Beyond these common elements, however, differences in competitive pressures across these industries serve to engender important differences in innovation strategies. Accordingly, much of what we can ultimately learn about the innovation process occurs at the industry level.
Release date: 2000-01-19
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