How do innovative manufacturing establishments acquire knowledge and technology: Findings from the 2005 Survey of Innovation

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by Raymond Leung and Frances Anderson, SIEID, Statistics Canada

The 2005 Survey of Innovation asked innovative manufacturing establishments questions related to how they acquired knowledge and technology for innovation and from whom. This article analyzes the two-thirds of manufacturing establishments that were innovative – that is they introduced a new or significantly improved product or process during the three reference years, 2002 to 2004– and sheds light on their purchase of knowledge and technology, the importance of information sources, and their collaborative partners.

About this article
Context
Findings
Summary
About the authors

About this article

The 2005 Survey of Innovation surveys manufacturing and logging industries for the reference period 2002 to 2004. The statistical unit of observation is the establishment. Innovative establishments are those that indicated in the Survey of Innovation that they introduced a new or significantly improved product or process during the reference period.

More information about the Survey of Innovation is available here.

Preliminary results from the 2005 Survey of Innovation, covering manufacturing industries, are now available. Please contact frances.anderson@statcan.gc.ca for more information.

Context

In order to develop new and significantly improved products and processes, firms acquire knowledge and technology from various external sources and by various methods. In the most general terms, firms have three different options when acquiring knowledge and technology from outside the firm. They can purchase the knowledge and technology, they can acquire information relevant to their innovation activities, or they can enter into collaborative arrangements to jointly develop innovative products and processes with partners¹.

Findings

From where did innovative manufacturing establishments purchase their knowledge and technology?

The survey asked innovative manufacturing establishments to identify in which of three types of innovation activities involving the purchase of knowledge and technology they were engaged. Firstly, establishments can purchase research and development (R&D) services from other firms or from public private and public research organizations. Secondly, establishments can purchase advanced machinery, equipment or computer hardware or software. Thirdly, establishments can purchase other external knowledge including the purchase or licensing of patents and non-patented inventions, and know-how.

Chart 1 shows the most commonly cited type of innovative activity involving the purchase of knowledge and technology between 2002 and 2004: the purchase of machinery, equipment and software. This was identified by four out of five innovative manufacturing establishments. Approximately one in five innovative establishments indicated that they had purchased external R&D, with the same proportion indicating that they had purchased other external knowledge.

How important were information sources for innovative manufacturing establishments?

Establishments were asked to identify information sources that provided information for new innovation projects, contributed to the completion of existing innovation projects or provided information for the commercialization of innovation. Ten possible external market and institutional sources were listed and establishments were also asked to indicate the degree of importance of the sources they used (high, medium, low or not relevant).

Chart 2 presents two indicators of the importance of the information sources: 1. "high importance" for respondents who indicated the source was of "high" importance; and 2. "some importance" for respondents who indicated the source was of high, medium or low importance.

In terms of the sources which were considered by innovative establishments to be of some importance (and thus to be of some relevance) to their innovative activities, market information sources were ranked highest. More than four out of five innovative establishments assigned some importance to: 1. clients or customers; 2. suppliers of equipment, materials, components or software; and 3. competitors or other firms in their sector. These were followed by consultants who were considered to be of some importance by two-thirds of innovative establishments, and commercial labs or R&D firms, considered to be of some importance by one half of innovative manufacturing establishments.

Between one-third and one-half of innovative establishments considered public institutional sources to be of some importance, while one-half of innovative establishments considered universities and higher education institutions to be of some importance.

A higher percentage of innovative establishments indicated that market sources were of high importance than they did public institutional sources. Only suppliers and clients or customers were considered to be highly important sources of information by more than one out of five innovative establishments.

With whom did innovative manufacturing establishments co-operate?

Innovative manufacturing establishments were first asked if they co-operated on any of their innovation activities with other firms or other organizations, innovative co-operation being specified as the active participation with other firms and organizations on innovation activities, excluding pure contracting out where there is no active co-operation. Overall, one fifth of innovative establishments indicated that they had some type of co-operative arrangement. Those that collaborated were then asked to identify who their partners were from a list of twelve.

Suppliers of equipment, materials, components or software, along with clients were identified as partners by three-fourths of innovative establishments who collaborated. It is interesting to note that collaboration with other plants within the same firm was indicated by 40% of the collaborating establishments, while industrial associations were identified by one-third of collaborating establishments.

Among the public organization partners, universities and higher education institutions were identified as a partner by the highest percentage (one-third) of collaborating innovative establishments.

Summary

From the results presented above, it can be concluded that suppliers are very important for the acquisition of knowledge and technology by innovative manufacturing establishments in terms of sources of information, purchase of knowledge and technology, and collaborative partners. In general, market actors, including clients, were used more frequently for acquiring knowledge and technology than public institutional sources. This being said, public institutions were found to be of some importance as sources of information by between one-third and one-half of innovating firms. They were also collaborating partners in innovation for between 10% and one-third of establishments that entered into such arrangements.

Further work needs to be done to better understand the conditions under which innovative manufacturing establishments acquire their knowledge and technologies from actors other than their suppliers and clients with whom they have on-going and market relations. The results of this study show that the acquisition of knowledge and technology from suppliers and clients is very widespread, with only a relatively small percentage of innovators not being involved with their suppliers and clients. Further analysis could examine whether size, geographical location, type of industry, innovation intensity or absorptive capacity play a significant role in firms' acquisition of knowledge and technology from market actors who are not clients or suppliers, and from public institutions.

About the authors

Raymond Leung and Frances Anderson are with the Science, Innovation and Electronic Information Division (SIEID) at Statistics Canada. For more information about this article, please contact sieidinfo@statcan.gc.ca.

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Note

1. For a more detailed discussion of the issue of the acquisition of knowledge and technology see: OECD/EUROSTAT. 2005. Guidelines for Collecting and Interpreting Innovation Data (Oslo Manual). Paris, pp. 75-88.