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Commercialization activities of innovative manufacturing plants: Findings from the Survey of Innovation, 2005

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by Susan Schaan

Innovation commercialization, the process of introducing a new or significantly improved product to market, is an important innovation activity for a plant and is the final stage in new product development. Without successful commercialization, innovations may not return any benefits for a plant’s innovation efforts. The Survey of Innovation 2005 asked innovative manufacturing plants questions related to commercialization activities and provides information on the type of these activities being undertaken. Market success is measured in terms of the share of revenues in 2004 from product innovations introduced during the years 2002 to 2004.

About this article
Context
Findings
About the author

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About this article

The sample unit for the Survey of Innovation 2005 was the ‘statistical establishment,’ for which the questionnaire substituted ‘plant.’ The more familiar latter term is also used in this article.

In the charts, each estimate is graphically illustrated as a horizontal or vertical bar. The confidence interval,1 a line extending through the end of each bar, shows that the estimate lies within the indicated range of values 95% of the time. Individual estimates with confidence intervals that overlap are not statistically significantly different from each other; those with confidence intervals that do not overlap are statistically significantly different from each other.

More information about the Survey of Innovation is available here.

Results from the 2005 Survey of Innovation are now available. Please contact susan.schaan@statcan.gc.ca for more information.

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Context

Based on the Oslo Manual guidelines,2 the Survey of Innovation 2005 defines an ‘innovative’ plant as one that has introduced a new or significantly improved good or service (product) to the market, or a new or significantly improved process, including a new or significantly improved way of delivering goods or services; a ‘non-innovative’ plant has made no such introductions. Only innovations occurring during the three-year survey reference period, 2002 to 2004, were considered in this analysis.

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Findings

At least two-thirds of innovative manufacturing plants engaged in an activity related to the commercialization of their innovation
Profitability analysis was the most common commercialization activity of innovative plants
Virtually all product innovative plants successfully commercialized their innovations
Product innovations introduced between 2002 and 2004 made up about one-sixth of plant revenues in 2004
Summary

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At least two-thirds of innovative manufacturing plants engaged in an activity related to the commercialization of their innovation

Four out of five (84.0%) innovative manufacturing plants engaged in activities for the market introduction of their product (good or service) innovations, and two-thirds (66.5%) of innovative plants undertook activities to assure the commercial success of their product innovations during the three years 2002 to 2004. This shows that innovative manufacturing plants were more likely to undertake activities for the market introduction of product innovations than activities to assure their commercial success.

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Profitability analysis was the most common commercialization activity of innovative plants

Profitability analysis was the commercialization activity carried out by the highest percentage of innovative plants, with almost two-thirds (64.5%) engaged in this activity (Chart 1). After sales consumer feedback, project feasibility studies, market research, market planning, and product positioning or profiling were among the next most common activities, each carried out by about one-half of innovative manufacturing plants. Consumer acceptance testing and launch advertising were the commercialization activities related to market introduction of innovations undertaken by the lowest percentage of innovative manufacturing plants, with about one-third of plants engaged in these activities.

Chart 1 Percentage of innovative manufacturing plants engaged in activities for innovation commercialization during the three years, 2002 to 2004. Opens a new browser window.

Chart 1 
Percentage of innovative manufacturing plants engaged in activities for innovation commercialization during the three years, 2002 to 2004

Three post-introduction commercialization activities were the least likely commercialization activities to be undertaken. Less than one-third (29.9%) of innovative manufacturing plants engaged in post-introduction advertising campaigns or distribution agreements and less than one-fifth (14.5%) engaged in international marketing partnerships.

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Virtually all product innovative plants successfully commercialized their innovations

What sort of indicators exist for the successful commercialization of a product innovation? If the innovation returned revenues it could be considered to have some degree of success. Accordingly, virtually all plants successfully commercialized product innovations in 2004 that were introduced during the years 2002 to 2004, that is, they received some revenues from the innovation (Chart 2). Some of these innovations were products that were already available from competitors, while others were not.

Chart 2 Percentage of innovative plants with revenues in 2004 from product innovations introduced to market before competitors and product innovations that were already available from competitors during the three years, 2002 to 2004. Opens a new browser window.

Chart 2 
Percentage of innovative plants with revenues in 2004 from product innovations introduced to market before competitors and product innovations that were already available from competitors during the three years, 2002 to 2004

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Product innovations introduced between 2002 and 2004 made up about one-sixth of plant revenues in 2004

The percentage of total revenues derived from product innovations is another indicator of the success of product commercialization. There was no significant difference in percentage of revenues derived from innovations whether the innovation was introduced before competitors, or if it was already available (Chart 2).

Among the one in two (47.7%) innovative plants that introduced a new product to market before their competitors from 2002 to 2004, these product innovations accounted for an average of 16.1% of the plants’ revenues in 2004. Among the four in ten (41.5%) innovative plants that introduced a new product to market that was already available from their competitors, these product innovations made up an average of 15.3% of the plants’ revenues in 2004.

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Summary

This article has shed some light on commercialization activities of innovative plants. According to the Survey of Innovation 2005, at least two-thirds of innovative manufacturing plants engaged in an activity related to the commercialization of their product innovation during the years 2002 to 2004. Four out of five (84.0%) innovative manufacturing plants engaged in activities for the market introduction of their innovations, and two-thirds (66.5%) of innovative plants undertook activities to assure the commercial success of their innovations.

Whether or not product innovations were already available from a plant’s competitor did not appear to impact on the percentage of revenues from these innovations. About one-sixth of an innovative plant’s total revenues in 2004 came from their product innovations introduced from 2002 to 2004.

A new survey, the Survey on the Commercialization of Innovation, 2007 was carried out in late 2007 and early 2008. It collected information from small and medium-sized innovative manufacturing firms on the following: commercial performance in marketing reported for the most significant and recent product innovation; strategic commercialization activities; financial activities for commercialization; cooperative agreements on commercialization; intellectual property; general information; and profile of entrepreneurs. Results are expected to be available in the fall of 2008.

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About the author

Susan Schaan is with the Science, Innovation and Electronic Information Division at Statistics Canada. For more information about this article, please contact sieidinfo@statcan.gc.ca.


Notes

  1. As the sample drawn for the Survey of Innovation 2005 was only one of many possible samples that could have been drawn using probability sampling methods, a sampling error can be attributed to each estimate. Standard errors combined with imputation rates have been used to provide a guide as to the reliability of percent estimates. The System for Estimating Variance due to Non-response and Imputation program (SEVANI) was used to complete these calculations. For the Survey of Innovation 2005, a 95% confidence interval was used in the probability sample scheme.

  2. Organisation for Economic Co-operation and Development and Eurostat, 1997, Oslo Manual, 2nd edition: Proposed Guidelines for Collecting and Interpreting Innovation Data, Paris. These guidelines were adopted for the Survey of Innovation 2005.