Measuring Innovation in Firms

Abstract

This chapter examines the interdependence between various measurements of firms’ innovation outputs. Linking firm-level microdata from the Japanese National Innovation Survey to the literature-based microdata on firm innovation from press releases and data on intellectual property rights such as patents, trademarks, and design registrations, I construct a panel data set that captures the diversity of innovation activities. Additionally, I examine the effects of firms’ innovation outputs on the market value and productivity of firms. The empirical results suggest that observed firm’s press releases represent the multidimensional innovation activities of firms, particularly the radical product (new-to-market) innovations, organizational innovation, and research and development (R&D) activities for technological developments. For intellectual property rights, the empirical results show that firms with product innovation registered more trademarks, and firms with more radical new products registered trademarks. Patent data reflects the R&D activity of firms, while design registrations reflect the self-reported design innovations and design activity measured in the innovation survey. In addition to patent applications and trademark registrations, press releases on new products, technological developments, and organizational changes increase the market value of a firm.