1. Determinants of Innovation in Portugal. Designing, Implementing and Analyzing Evidence from the 3 rd Community Innovation Survey (1) Manuel João de Albuquerque Rocha Pereira Bóia mjboia@dem.ist.utl.pt Orientador:Doutor Pedro Filipe Teixeira da Conceição Instituto Superior Técnico – Universidade Técnica de Lisboa 3 September 2003 (1) the research reported in this thesis was partially supported by Observatorio da Ciencia e do Ensino Superior (OCES) [Obervatory of Science and Higher Education, Ministry for Science and Higher Education, Portugal]

2. Outline 1.Objective 2.The Community Innovation Survey (1) 3. Results,  Innovative Enterprises by Sector and CIS Trajectories in the European Context  Input vs. Output of Innovation in Europe  A regression analysis of the CIS III data  Other Strategic and Organizational Important Changes  Innovation Sources  Innovation Barriers 4.Lessons Learned and Conclusions (1) Performed under contract with the Observatório das Ciências e Tecnologias (OCT – Sciences and Technologies Observatory, and since early 2003, Observatório das Ciências e do Ensino Superior, Sciences and Higher Education Observatory - OCES) within the Center for Innovation, Technology and Policy Research at Instituto Superior Técnico (IN+/IST) and primary sources of the analyzed data.

3. Objective To contribute to the characterization of the Determinants of Innovation in Portugal through the Design, Implementation and Evidence Analysis of the Third Community Innovation Survey (1998-2000) and the analysis of the EU countries Innovation Trajectories from CIS II to CIS III. 1.

4. CIS 32.1 Portugal Survey Sample Initial Sample: 4727 firms stratified by firm size and sector (INE–1999 Data)Initial Sample: 4727 firms stratified by firm size and sector (INE–1999 Data) Corrected sample: 4127 firmsCorrected sample: 4127 firms Sectors Surveyed Mining and Quarrying, all Manufacturing, Utilities, Wholesale Trade and a selection of industries in the Service SectorMining and Quarrying, all Manufacturing, Utilities, Wholesale Trade and a selection of industries in the Service Sector Survey Target Population All Manufacturing and Service firms with more than 10 employeesAll Manufacturing and Service firms with more than 10 employees

5. Innovation Definition Used: Market introduction of a product (Good or Service) new or significantly improved, or the introduction of new or significantly improved processes, based on new technological developments, new combinations of existing technologies or on the use of other type of knowledge acquired.Market introduction of a product (Good or Service) new or significantly improved, or the introduction of new or significantly improved processes, based on new technological developments, new combinations of existing technologies or on the use of other type of knowledge acquired. The innovation should be new to the company and not necessarily to the market. CIS 32.2 Portugal

6. Questionnaire Harmonized questionnaire (the same for Services and Manufacturing and other industries)Harmonized questionnaire (the same for Services and Manufacturing and other industries) Questions regarding:Questions regarding: General Information Basic Economic Information Product and Process Innovation Patents and Other Protection Methods Innovation Activities and Expenditure Intramural R & D Other Strategic and Organizational Important Changes Effects of Innovation Public Funding Innovation Co-operation Sources of Information for Innovation Hampered Innovation Activity Companies Characteristics Innovation Extension Companies Options Systemic Characteristics CIS 32.3 Portugal

7. Results - Innovative Enterprises by Sector and CIS Trajectories in the European Context Ireland Austria Germany Netherlands UK Sweden Norway France Luxemburg Belgium 0% 20% 40% 60% 80% 100% 20%40%60%80%100% Proportion of Manufacturing Innovating Enterprises Proportion of Service Innovating Enterprises Portugal Italy (1)For comparison with the data of 1995-1997 some Sub sectors (NACE 63, 73, 74.3 e 64 except 64.2) and the manufacturing companies in between 10 and 20 employees which were part of the CIS 3 survey are not considered (2)Includes the results not considered in (1). Note:Final disaggregated and comparable results are not yet available for the other participants in the exercise. (1) (2) CIS III (Preliminary) CIS II Finland 3.1

8. Ireland Germany Austria Netherlands UK Sweden Norway France Finland Belgium Portugal 0% 20% 40% 60% 80% 0.0%2.0%4.0%6.0%8.0% Expenditure in Innovating Activities as Share of Turnover Porportion of Innovative Enterprises Manufacturing Sector CIS III (Preliminary) CIS II Results – Input vs. Output of Innovation in Europe 3.2

9. Logistic Regression (Manufacturing) Source: (Conceição and Heitor, 2002; Conceição et al., 2003) Logistic Regression (Manufacturing) Results - A regression analysis of the CIS III data Model on the Characteristics of Innovative Manufacturing Enterprises by Conceição and Heitor Dependent variable: Innovation, dichotomous (1 if a firm innovates, 0 otherwise) Explanatory variables: integration into a Group firm dimension (Log of number of employees) technology intensity (divided in two dummy variables High/Medium-High and Medium Low) CIS IIcoefficient Standard Deviation p-values Intercept-1.7730.25620.0000 Group0.4740.14350.0009 LogEmp0.2240.06250.0003 HiMHTech0.7570.13800.0000 MLTech0.1630.11630.1614 CIS IIIcoefficient Standard Deviation p-values Intercept2.4540.0730.0000 Group0.2180.0540.0001 LogEmp1.2490.0470.0000 HiMHTech0.5470.0520.0000 MLTech0.5890.0410.0000 3.3

10. Results - Other Strategic and Organizational Changes 3.4

11. Results - Innovation Sources of Highly Importance for Manufacturing 3.5

12. Results - Innovation Barriers of Highly Importance 3.6

13. Lessons Learned from the CIS III Implementation: Unreliable Initial Sample (1999 Data)Unreliable Initial Sample (1999 Data) Non-Enforcement of the Policy regarding Mandatory SurveysNon-Enforcement of the Policy regarding Mandatory Surveys Biased General perception of Innovation Definition (“Radical” Innovation)Biased General perception of Innovation Definition (“Radical” Innovation) Services misperception of Innovation Definition (Product and/or Goods)Services misperception of Innovation Definition (Product and/or Goods) Non-Disclosure Policy of Financial DataNon-Disclosure Policy of Financial Data Lack of Qualifications of the Questionnaire Filling Contact Person (“Cultural” bias towards Non Response or Non Innovation)Lack of Qualifications of the Questionnaire Filling Contact Person (“Cultural” bias towards Non Response or Non Innovation) Lack of correspondence between the surveyed data/indicators and Companies data/indicators gathering.Lack of correspondence between the surveyed data/indicators and Companies data/indicators gathering. Mergers and Acquisitions (Availability of Contact Person and Data)Mergers and Acquisitions (Availability of Contact Person and Data) Huge paperwork!Huge paperwork! In Data Processing,In Data Processing, High values of “Item Non-response” in some strata (CAE 2 Digits*Dimension) of the realized sample for some variables, ”Exports Sales”, “Innovation Expenditure”, “Level of importance in Cooperation”, “Innovation Hampering Factors (partially)” and Patents Unreliable missing values imputation methodology and routines provided by Eurostat, surpassed in cooperation with other member states. 4.1

14. Lessons Learned and Conclusions: 1.The CIS is a good evolving instrument for benchmarking and follow up of the best practices, although incomplete in what concerns the systemic characteristics of innovation. 2.A significant increase in the innovation extension and in the firms innovation expenditure was achieved for Portugal in CIS III compared to CIS II. 3.In the innovation process, both sources and barriers to innovation profiles remain consistent with the CIS II data, where the most relevant are respectively “Within the Enterprise” and financial constraints. 4.Innovation expenditure has reached a milestone above which innovation effectiveness appears to be more correlated with factors of systemic nature. 5.Technological innovation appears to be strongly correlated with Organizational Innovation and Change. 4.2

15. Determinants of Innovation in Portugal. Designing, implementing and Analyzing Evidence from the 3 rd Community Innovation Survey Manuel João de Albuquerque Rocha Pereira Bóia mjboia@dem.ist.utl.pt Orientador:Doutor Pedro Filipe Teixeira da Conceição Instituto Superior Técnico – Universidade Técnica de Lisboa 3 September 2003

16. Additional Slides

17. CIS 3 Portugal Survey Start date: October 2001Start date: October 2001 Sample verification and validation (Name and Address) and identification of a contact personSample verification and validation (Name and Address) and identification of a contact person Mailing of Questionnaire with innovations examples and a postage free envelope for replying (fax reply also accepted)Mailing of Questionnaire with innovations examples and a postage free envelope for replying (fax reply also accepted) Systematic phone reminders plus two fax reminders and an additional questionnaire re-mailingSystematic phone reminders plus two fax reminders and an additional questionnaire re-mailing Support is provided on working days by phone, fax or e-mail by a multidisciplinary team of 6 trained staff peopleSupport is provided on working days by phone, fax or e-mail by a multidisciplinary team of 6 trained staff people End date --> 15 th April 2002End date --> 15 th April 2002

18. Response Rates CIS 3 Portugal Small – 10 to 49 Employees Medium – 50 to 249 Employees Large - over 250 Employees

19. Results - Innovation Extension

20. Results – Product and Process Innovation Product Innovation Product and Process Innovation Process Innovation

21. Results - Innovation by Firm Size

22. CIS 3 Portugal

23. Results – Innovation by Technological Intensity (Manufacturing)

24. Results - Innovation Sources of Highly Importance for Services

25. Clear characteristic: the Portuguese companies ignore or do not choose to use patenting as a protection tool Results - Patenting

26. Results – Other Protection Methods Used