From OECD: Oslo Manual 2018:
What is innovation and how should it be measured? Understanding the scale of innovation activities, the characteristics of innovative firms and the internal and systemic factors that can influence innovation is a prerequisite for the pursuit and analysis of policies aimed at fostering innovation.
First published in 1992, the Oslo Manual is the international reference guide for collecting and using data on innovation. In this fourth edition, the manual has been updated to take into account a broader range of innovation-related phenomena as well as the experience gained from recent rounds of innovation surveys in OECD countries and partner economies and organisation. The manual outlines key concepts, definitions, and methodologies for measuring innovation to enable a better understanding of innovation activities and their impact on various aspects of the economy and society [1]. This response summarises these concepts, definitions, and methodologies.
The Oslo Manual 2018 emphasizes that innovation should be measurable [2]. The manual highlights four key dimensions of innovation [3]:
- Knowledge: Innovations stem from knowledge-based activities that involve the practical application of new or existing information and knowledge [3].
- Novelty: Innovation implies introducing something new or significantly improved compared to existing products or processes [4].
- Implementation: An innovation must be implemented, meaning it has to be put into practice or made accessible for others to use [5]. This differentiates innovation from inventions, which may not be implemented [5].
- Value Creation: Although not a requirement for the baseline definition of an innovation [6], the manual recognizes that innovation typically aims to generate or preserve value, either for the firm or for a broader context like the market or society [6, 7].
The Oslo Manual 2018 provides distinct definitions for innovation activities and innovation to avoid confusion. Innovation activities refer to actions taken to develop or implement innovations, while innovation pertains to the outcome of such activities [8].
The manual defines business innovation as follows [9]:
A business innovation is a new or improved product or business process (or combination thereof) that differs significantly from the firm’s previous products or business processes and that has been introduced on the market or brought into use by the firm.
The manual further distinguishes between innovative firms, which have successfully introduced one or more innovations within the observation period, and innovation-active firms, which have engaged in innovation activities but have not necessarily achieved an innovation outcome [10].
The Oslo Manual 2018 primarily recommends using surveys as the primary method for collecting data on business innovation [11]. It acknowledges the existence of other data sources like new product announcements [11], but its focus remains on surveys. The manual provides guidelines on different aspects of conducting innovation surveys, including [12]:
- Setting objectives and scope: Defining the purpose and coverage of the survey.
- Identifying the target population: Determining which businesses to include in the survey.
- Questionnaire design: Creating clear and unambiguous questions aligned with the Oslo Manual’s definitions.
- Sampling procedures: Selecting a representative sample of businesses.
- Data collection methods: Choosing appropriate methods, such as online or face-to-face interviews.
- Survey protocols: Establishing procedures for contacting respondents, conducting interviews, and handling non-responses.
- Post-survey data processing: Cleaning, coding, and weighting data.
- Dissemination of statistical outputs: Publishing aggregated data and indicators in a user-friendly format.
The manual also recommends using both qualitative and quantitative data to measure innovation [13] and suggests that national statistical offices or delegated agencies with relevant expertise and authority should ideally conduct these surveys [14].