Measuring User Innovation : What Can a Standard Innovation Survey Tell Us?

In this paper, we explore the amount and impact of firms that can be considered being user innovators. Using the Swiss Innovation Survey, we identify a sample of innovative firms that we explore with regard to their commitment to R&D. We thereby create a measure for informal innovation—that is, innovation not explicitly planned and budgeted—by identifying innovative firms that do not conduct any R&D. We argue that user innovators are the main source of such technological innovation and propose two methods to measure the usually hidden (informal) activities. First, by defining user innovators as non-R&D innovators, we show that they comprise 46% of all innovating firms. Furthermore, they represent more than one third of the economic impact induced by product and process innovations. A second method defines user innovators as over-innovators in an innovation function. Exploring the residuals, we show that user innovators in process technology comprise about 38% of process innovating firms and that they represent 37% of reduced costs in the economy. Furthermore, for these user innovators, 40% of costs reductions are found to be induced by users (within the firms). Thus, about 15% of the overall cost reductions in the economy comes from user innovation within firms