1. December 2018 THE NATIONAL INNOVATION SURVEY AND ITS DETERMINANTS IN THE BUSINESS SECTOR Dec.2018

2. OUTLINES INTRODUCTION objective significance statement scope limitation INTRODUCTION objective significance statement scope limitation

3. INTRODUCTION All the man-made changes that the world has witnessed are a result of this tendency to look for something new and different. The desire to try something else is a prominent human characteristic. There is no end to the new ideas in the world, but when these ideas create value, it becomes innovation. Good ideas are of no use unless they are implemented.

4. …cont. From time to time, innovation is done by taking an existing idea, concept or product and improving it. It is a process, not a destination. Any individual, any company, in any industry, can be innovative. It is important to be clear that innovation is NOT invention. An innovation is the extension of an invention. If an inventor discovers “the next big thing” but is unable to find anyone to produce it, then “the next big thing” remains undiscovered to the world.

5. INTRODUCTION While inventions can be carried out anywhere, for example in universities & research institutes, innovation occurs mostly within firms. To be able to turn invention into innovation a firm normally needs to combine several different types of knowledge, capabilities, skills and resources. For instance, the firm may require production knowledge, skills and facilities, market knowledge, a well functioning distribution system, sufficient financial resources, etc.

6. Determinants of Innovation The ability to innovate is not linear among companies, being determined (positively or negatively) by several factors and the iteration between them. Size, Human capital, acquisition of knowledge, sources of information and cooperation for innovation.

7. Why is innovation important? benefits for society: Ideas and discoveries improve our standard of living and safety better health care better quality products and products and services that are better for the environment For businesses: it can lower the cost of production build new markets Increase competitiveness can drive performance by building profitability generating employment and increasing market share and growth Innovation is a key driver of economic growth.

8. INTRODUCTION As the world economy evolves, so does the process of innovation. Nevertheless, the dramatic growth in STI measurements witnessed only in the last 20 years due to the ease of computerized access and the interest in a growing number of public policy and private business circles in such indicators.

9. INTRODUCTION As a single agreeable measurement Oslo manual, a Comprehensive and well-structured international guideline was implemented for measuring and comparing countries innovation performance.

10. INTRODUCTION An innovation is the implementation of a new or significantly improved product (good or service), or process, a new marketing method, or a new organizational method in business practices, workplace organization or external relations. ( Based on “Oslo Manual”, 3rd edition, 2005 ).

11. INTRODUCTION 1.Product innovation involves the introduction of a new or significantly improved good or service. This might include improvements in functional characteristics, technical abilities, ease of use, or any other dimension. 2.Process innovation involves the implementation of a new or significantly improved production or delivery method. 3.Marketing innovation is the development of new marketing methods (egg. improvement in product design or packaging, product promotion or pricing). 4.Organizational innovation involves the creation of new organizations, business practices, ways of running organizations or new organizational behavior.

12. INTRODUCTION Technology and innovation institute of Ethiopia, formerly Ethiopian science and technology information center-STIC, is mandated to measure various STI indicators. Thus, it has published its first national innovation survey by 2014/2015 that could serve as a benchmark.

13. INTRODUCTION Benchmarking the previous study, and based on the manual this paper aimed to cover: The innovation performances of the country. The major determinants of innovation activities in the business Sector. Linkages with other firms and institutions in the innovation process. Innovation trend in less R& D-intensive industries, such as services and low-technology manufacturing.

14. OBJECTIVE OF THE STUDY

15. GENERAL OBJECTIVES The main goals of the study are: To Measure the level of National innovation performance in Ethiopia. To examine the major Determinants of firms’ Innovation performance

16. SPECIFIC OBJECTIVES To measure the level of innovation performance and international standing of the country. To measure the Expenditure spent as well as related public financial support for innovation. Find out the reasons, objectives and hampering factors of firms’ innovation. Figure out factors (like Size,, innovation strategy, sources of ideas or information, Public sector contracts and ICT usage…) determine innovation performance.

17. SIGNIFICANCE OF THE PROBLEM

18. It enables the policy makers to diagnose the failure or success of its STI policy. The implementation of this study provides information for the newly organized Technology and Innovation Institute of Ethiopia as well as Ministry of Innovation and Technology about the reasons why firms innovate; what forces drive innovation and which factors hinder it.

19. SIGNIFICANCE OF THE PROBLEM By giving a picture about innovation status of the country, it may motivate to implement independent national innovation policy as well as persuade for positive intervention By identifying sectors involved in innovation performances, it may enable policy makers or responsible government organs to create or improve linkage mechanisms so as to enhance innovation.

20. STATEMENT OF THE PROBLEM

21. The national STI policy of the country vision to entrench the capabilities which enable rapid learning, adaptation, and utilization of effective foreign technologies by the year 2022/23.

22. STATEMENT OF THE PROBLEM The generalised presentation of innovation in Science, Technology and Innovation (STI) policy or absence of innovation policy and implementation strategy independently creates the gap in defining innovation and innovation activities clearly. Adversely, this creates obstacles on plans, measures and action to be taken in order to put innovation on the ground and accelerate innovation activities. Egg. The “inclusive innovation policy” of china

23. STATEMENT OF THE PROBLEM Lack of updated and continuous information and analysis on key policy- relevant variables in the process of innovation (such as financial support, co-operation, sources of information for innovation, factors hindering the process of innovation…) hinders the process made to understand the gap between the reality on the ground and the process of policy implementation.

24. STATEMENT OF THE PROBLEM Information gap on the current status of those entities or enterprises which are aimed to exercise rapid learning, adaptation, utilization of effective foreign technologies and innovation activities are not well known. There is a gap in providing empirical information on factors that determine whether or not innovation takes place in companies, that is, the factors of success or failure of the innovative process. (Egg. Size, Human capital, acquisition of knowledge, cooperation for innovation…). If these remain unchanged the vision 2022/23 may not be achieved.

25. Scope of the study

26. scope The study has clearly defined its scope in conceptual, geographical and time aspects. Conceptually, first of all, the survey was designed to deal with innovations in the business enterprise sector. Second, it is concerned with the collection of innovation data at the level of the firm with 10 and more than 10 employees. It does not cover at individual or industry level. Third, survey covers four types of innovations that encompass a wide range of changes in firms’ activities: product, process, organizational and marketing innovations. Last but not least the survey deals with changes that involve a significant degree of novelty for the firm. It excludes changes that are minor or lack a sufficient degree of novelty.

27. scope Geographically, it covers all active business firms throughout the country or from 9 regions and 2 city administration registered under the federal government. The survey covers the period 2009 and 2010E.C.

28. LIMITATION Possible limitation of the study arises from the poor data management system of the country which could limit the quality of the survey.

29. METHODS The target population for the study comprised business sectors including private enterprises (either publicly listed or traded, or not) and government-controlled enterprises (referred to as “public enterprises” or “public corporations”) in all regions and administrative cities. Population and Sample

30. …cont. Based on Oslo manual only business entities that have more than ten employees can be considered as a frame population and to be selected as frame for a sample selection using Statcalc, which are 2085 business enterprises.

31. …cont. Cons.Manuf. Minin g Servic e Total Small73913201671038 Medium348208224583 Large962362621379 Total1183576282132085

32. …cont. Source and type of data collection The data used for the study were mainly primary data through a field survey of small, medium and large enterprises across public developmental agencies and privatized enterprises in the study population.

33. …cont. Method of Data Analysis The statistical analysis will comprise of computing descriptive statistics and logistic regression methods of analysis. The numbers and proportions of firms involved in various types of innovation activities classified by sector and size class. The variables included in the study are described based on descriptive statistics. In the descriptive statistics, tables, charts, ratio values, means will be used. And to measure the association, the chi-square test will be used.

34. Variables Dependent variable The dependent variable for this study was the innovation coded as "1" if the firm innovates, and "0" otherwise Independent Variable The Independent variable for our study is  Size of the firm/organization ( small, medium, large)  Age of firm ( from year of establishment to survey reference year )  Top management duration at the position  management’s educational qualification, Gender and Age;  Employees educational Qualification, Age and Gender  Total Turnover for goods and services  Firm/organization part of enterprise group  enterprise’s innovations mainly originate  Having innovation strategy  Intramural R&D performed or not  Extramural R&D performed or not  Having Cooperative Arrangement  Public sector contracts  ICT usage for innovation purpose