Innovation
The use of new technology to create new products and services is
crucial to the growth of firms and economies for several reasons.
- It creates entirely new markets and improves the quality of products
while reducing prices. Thus, innovation simultaneously drives economic
growth while improving consumer welfare.
- Firms at the leading edge of innovation tend to dominate world markets
and promote the international competitiveness of their home economies.
- Innovation drives creation of rent-generating patents that help corporations and entire countries. It is no surprise, therefore, that governments throughout the world have realized the importance of innovation.
Research
The Center for Global Innovation developed two annual indices of global
innovativeness:
- Global Firm Innovativeness Index
- Global Consumer Innovativeness Index
These indices measure 15 to 30 of the world's leading economies, sampling approximately 100 of their largest companies and 400 consumers of the companies' goods and services. By making cross-national and cross-cultural comparisons, these indices explore what factors lead to innovativeness. And by tracking innovation over time, they indicate how changing environments and polices hurt or help innovativeness.
In particular, these indices point out how firms, consumers, and countries can become more innovative, and therefore more competitive and powerful. Most important for our Center, we anticipate that these indices will become the world standard indicators of economic growth and global competitiveness.
Results
The Center for Global Innovation conducted several studies exploring
technological innovativeness in firms spanning multiple industries and world
economies. Our research indicates that three major factors contribute to their
technological innovativeness:
1. Willingness to Cannibalize. Innovative firms are those that are willing to cannibalize their current products in order to develop superior new products for new markets. This, in turn, requires that three important factors be in place:
- Internal competition,
- Product champions, and
- An orientation to the future.
2. Competitive environments. Firms are most innovative in environments that are highly competitive. Such environments result from minimal market regulation, openness to international competition, and incentives for research.
3. Innovative consumers. Innovative firms thrive in markets in which consumers are innovative and eagerly adopt new products. These factors constitute the key measures we track for our two indices.
Resources
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