The NSF has just come out with its latest report on innovation, and it’s a doozy. Basically, the NSF asked companies whether they engaged in product and/or process innovation, and here’s what they found out.
- Only 9% of companies engaged in product innovation in 2006-08. Only 9% of companies engaged in process innovation over the same period.
- Some industries were surprising low. Only 10% of healthcare services firms reported a process innovation from 2006-08.
- Only 8% of finance/insurance firm reported a product or process innovation in 2006-2008
- “Companies with R&D (either performing R&D or funding others to perform R&D) exhibit far higher rates of innovation than do non-R&D companies.”
The last result is extremely interesting. It means that the concentration of R&D is in fact a good proxy for the concentration of innovation. According to the NSF survey, only 7% of the companies without R&D report a product innovation over the past 3 years. But 66% of the companies with R&D report a product innovation. The gap for process innovations is almost as big.
You can’t be an innovative economy if only 9% of your companies are innovating.
Added 10/7/10: Reihan Salam at the National Review has a nice post asking Amar Bhidé for his response to the NSF survey, and why, perhaps, we shouldn’t be concerned. Ezra Klein picks up the survey as well. Surprisingly, it does not seem to have received much press….perhaps because it is too depressing.