REAL WORLD APPLICATIONS

The concept of innovative capacity has many practical applications. Below is a list and discussion of several possibilities.

Improving the technological leadership of economic activities, industries or specific firms.

Use of the concept of innovative capacity can provide many insights on the technological leadership of any economic activity, industry or specific firm. Their performance on innovative capacity can help shape strategy. For policy-makers, for example, declining innovative capacity in some sectors or industries may indicate a need to develop new policy strategies. Improving the educational infrastructure for technological fields that are closely related to those sectors or industries may be an example of how their innovative capacity can be improved. For firms, improving their innovative capacity may depend on allocating more resources for research and development (R&D), promoting first-mover research, engaging in research alliances with other firms, or outsourcing non-research activities. Decisions in all of those aspects can be informed by analyses of innovative capacity over time. Comparisons of the level of innovative capacity between industries, or between firms in any sector, can also provide indications of their technological leadership. In some cases, for example, firms or sectors with a high level of innovative capacity but poor market performance may need to emphasize the applications of their inventions and the search for new product niches. Improving the technological leadership of sectors, industries or firms is of major importance in today’s global economy.

Helping nations, regions or local areas become sources of new technology.

The concept of innovative capacity can provide many insights on the technological potential of nations, regions and localities. Increases in innovative capacity typically lead to the introduction of new technologies. Places that become major sources of new technology often experience much prosperity. Increasing incomes, rising educational and skill levels, more trade, greater political influence, less poverty, better infrastructure and more amenities are some of the benefits obtained by such locales. Measuring the level of innovative capacity between different nations, regions or localities can provide a comparative perspective of where a place stands as a source of innovative capacity. Policies can then be devised to support the factors that improve innovative capacity. Some of the policy measures can involve, for example, the attraction of firms with high levels of innovative capacity from other areas. Improving technological education and providing wider access, by expanding existing institutions and their resources, is another potential measure. Creating seed or venture capital funds to support business startups that can become new sources of innovative capacity may also be part of a development strategy. Today, many nations, regions and local areas are vying to become sources of new technology (for insights on how innovative capacity contributes to regional change, visit www.regionalinversion.com).

Finding a diagnostic indicator to register changes in technological potential.

Measuring the level of innovative capacity on a continuous basis over regular periods of time can provide a valuable indication of how nations, localities, industries or sectors stand as potential sources of new technology. There are many economic and social indicators that are regularly compiled and provided to the public to show how sectors, nations or local areas perform. Income, industrial output, retail sales, consumer and producer prices, industrial capacity usage and trade balances are some of the indicators that are regularly provided to help us determine the state of the economy. Innovative capacity could be regularly provided as an indicator of technological or innovative potential along with all those measures of economic performance. Compiling the data needed to provide such an indicator would be relatively simple, given recent advances in information technology and the excellent and very accurate data bases that patent agencies typically possess. In the United States, for example, the Patent and Trademark Office compiles data on patent applications and awards on a daily basis, along with the geographical origin of each applicant or award, and the industry or activity to which they are related. Such data alone would allow the innovative capacity indicator to be provided to the public on a monthly basis, in much the same way as the previously mentioned economic indicators.

Creating infrastructure that can support invention and innovation.

Infrastructure is a major support of innovative capacity. Educational infrastructure that supports technological knowledge and training is an important prerequisite for increasing the level of innovative capacity in any nation or locality. Infrastructure that directly promotes the diffusion of new knowledge is also an important support for innovative capacity. Determining the types of infrastructure that are needed can be informed by the measurement of innovative capacity in the sectors or economic activities that are targeted. Analyses of built infrastructure and their contribution to innovative capacity can also provide insights on how effective each type of infrastructure has been in promoting invention and innovation. Since much infrastructure is typically built with public funds, it is important for public officials to know which of the many types of infrastructure should be targeted for investment. This is a particularly important concern for lagging or peripheral regions that seek to establish a platform from which invention and innovation can develop.

Standardizing patent data and criteria across nations.

Developing global indicators of invention and innovation should be a major concern for international organizations. Different standards used in compiling data or in the evaluation and approval of patent applications is often an obstacle for making international comparisons. The concept of innovative capacity can provide a comparative framework for analyses of inventive output and technological potential across nations. Measuring differences in innovative capacity between nations can show the magnitude of disparities, providing an index or benchmark for international programs aimed at raising technological capabilities. With the advancement of globalization, establishing comparative benchmarks for invention and innovation has become more important than ever.

For research on some of these applications see Publications.