MARKETING INNOVATION MEASUREMENT

By Vlachaki Efi

Supervisor Dr. Xenia Ziouvelou

Master of Management in Business Innovation and Technology

2009-10

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Marketing Innovation Measurement

A thesis submitted in partial fulfilment of the requirements for the degree of Master of Management in Business Innovation and Technology Athens Information Technology 2009-10

Approved by ____________________________________________ Chairperson of Supervisory Committee _______________________________________________________ _______________________________________________________ _______________________________________________________ Program Authorized to Offer Degree __________________________________________

Date ____________________________________________________

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Acknowledgments

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I would like to deeply thank my advisor, Dr. Xenia Ziouvelou, for her guidance and support throughout the duration of my research. Her directions were invaluable especially at times when the results of my research seemed to be discouraging. Without her insight and encouragement, my thesis would have been incomplete.

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Table of Contents
1 INTRODUCTION ............................................................................................................2 1.1 1.2 2.1 2.2 2.3 DEFINING MARKETING .................................................................................................2 DEFINING INNOVATION .................................................................................................4 DEFINING MARKETING INNOVATION ...............................................................................7 COMPARISON TO OTHER TYPES OF INNOVATION .............................................................8 INNOVATION IN THE MARKETING MIX ..............................................................................9

2 MARKETING INNOVATION...........................................................................................7

3 INNOVATION MEASUREMENT ..................................................................................11 3.1 ESTABLISHED INNOVATION METRICS ...........................................................................11 3.1.1 European Innovation Scoreboard (EIS) ............................................................11 3.1.2 Tracking the State of Innovation in the American Economy .............................13 3.1.3 Backing Australia's Ability .................................................................................14 3.2 DIFFERENT APPROACHES TO INNOVATION METRICS .....................................................15 3.2.1 LBIO (Literature-Based Innovation Output) data ..............................................15 3.2.2 A smoot for measuring innovation ....................................................................16 3.3 CONCLUSIONS FOR INNOVATION MEASUREMENT .........................................................18 4 MARKETING INNOVATION MEASUREMENT: THEORETICAL ANALYSIS ...........21 4.1 NON-TECHNOLOGICAL INNOVATION MEASUREMENT ......................................................21 4.1.1 Service Innovation Measurement .....................................................................21 4.2 MARKETING INNOVATION DIMENSIONS .........................................................................23 4.2.1 Inputs ................................................................................................................24 4.2.2 Throughputs......................................................................................................26 4.2.3 Outputs .............................................................................................................33 5 MARKETING INNOVATION MEASUREMENT: PRACTICAL IMPLICATIONS ON FIRM-LEVEL ......................................................................................................................35 5.1 DATA ANALYSIS METHODOLOGY ..................................................................................35 5.1.1 Source Selection...............................................................................................35 5.1.2 Innovation Indicators Selection .........................................................................36 5.1.3 Analysis Scope .................................................................................................42 5.2 STATISTICAL ANALYSIS ...............................................................................................44 5.2.1 Inputs analysis by sector...................................................................................44 5.2.2 Inputs analysis by country.................................................................................47 5.2.3 Throughputs analysis by sector ........................................................................52 5.2.4 Throughputs analysis by country ......................................................................53 5.2.5 Outputs analysis per sector ..............................................................................55 5.2.6 Outputs analysis per country ............................................................................56 5.3 SUMMARY RESULTS ..................................................................................................57 5.4 LIMITATIONS & FURTHER IMPROVEMENTS ...................................................................60 6 CONCLUSIONS ...........................................................................................................62 7 REFERENCES .............................................................................................................63

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List of Figures
Figure 1: EIS 2005, innovation indicators for outputs.......................................................................19 Figure 2: Innovation process - dimensions ........................................................................................24 Figure 3: CIS4, questions about the lack of qualified human resources............................................36 Figure 4: CIS4, questions about the total number of employees .......................................................36 Figure 5: CIS4, questions about public financial support..................................................................36 Figure 6: CIS4, questions about the lack of funds .............................................................................37 Figure 7: CIS4, questions about the total turnover ............................................................................37 Figure 8: Module of CIS2008, questions about belonging to a group...............................................37 Figure 9: CIS4, questions about registered trademarks .....................................................................38 Figure 10: CIS4, questions about innovation activities .....................................................................38 Figure 11: Module of CIS2008, questions about marketing innovation linkages .............................38 Figure 12: Module of CIS2008, questions about marketing innovation activities ............................39 Figure 13: CIS4, questions about innovations in marketing..............................................................40 Figure 14: Module of CIS2008, questions about innovations in marketing ......................................40 Figure 15: Module of CIS2008, questions about the effects of marketing innovations ....................41 Figure 16: CIS4, public funding per sector........................................................................................45 Figure 17: CIS4, lack of internal funding per sector..........................................................................45 Figure 18: CIS4, lack of external funding per sector.........................................................................46 Figure 19: CIS4, belonging to a group per sector ..............................................................................46 Figure 20: CIS4, lack of qualified personnel per sector ....................................................................47 Figure 21: CIS4, public funding per industry (technological innovators) .........................................47 Figure 22: CIS4, lack of internal funding per country (technological innovators)............................48 Figure 23: CIS4, lack of internal funding per country (non-technological innovators) ....................48 Figure 24: CIS4, lack of external funding per country (technological innovators) ...........................49 Figure 25: CIS4, lack of external funding per country (non-technological innovators)....................49 Figure 26: CIS4, belonging to a group per country (technological innovators) ................................50 Figure 27: CIS4, belonging to a group per country (non-technological innovators).........................50 Figure 28: CIS4, lack of qualified human resources per country (technological innovators) ...........51 Figure 29: CIS4, lack of qualified human resources per country (non-technological innovator) .....51 Figure 30: CIS4, registered trademarks per sector.............................................................................52 Figure 31: CIS4, market-introduction activities per sector................................................................52 Figure 32: CIS4, other preparations per sector ..................................................................................53 Figure 33: CIS4, registered trademarks per country (technological innovators)...............................53 Figure 34: CIS4, registered trademarks per country (non-technological innovators)........................54 Figure 35: CIS4, market-introduction activities per country (technological innovators) ..................54 Figure 36: CIS4, other preparations per country (technological innovators) ....................................55 Figure 37: CIS4, marketing innovators per sector .............................................................................55 Figure 38: CIS4, marketing innovators per country (technological innovators) ...............................56 Figure 39: CIS4, marketing innovators per country (non-technological innovators) ........................56 Figure 40: Marketing concept lifecycle .............................................................................................62

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List of Tables
Table 1: Marketing definitions according to AMA and Kotler. ..........................................................3 Table 2: Differences between types of innovation...............................................................................8 Table 3: The marketing- and product-innovation matrix.....................................................................8 Table 4: EIS, 7 dimensions of innovation performance.....................................................................11 Table 5: EIS, 29 indicators of innovation performance. ....................................................................12 Table 6: ASTRAs indicators of innovation performance. ................................................................14 Table 7: AIS 15 indicators of innovation performance......................................................................15 Table 8: LBIO data and CIS as innovation indicators. ......................................................................16 Table 9: Percent of Revenue of New products in relation with that of New Platforms.....................17 Table 10: Evolution of innovation metrics ........................................................................................18 Table 11: Enterprises with innovation activities that introduced a non-technical innovation ...........21 Table 12: Service sector innovation indicators ..................................................................................22 Table 13: Percent of innovative firms that applied for a patent, registered a design or trademark, or claimed copyright between 2002 and 2004........................................................................................22 Table 14: Marketing Innovation Dimensions ....................................................................................34 Table 15: Corporate Marketing Innovation Scorecard ......................................................................42 Table 16: Scope of statistical analysis ...............................................................................................42 Table 17: Main NACE sections in CIS4............................................................................................43 Table 18: The indexes ........................................................................................................................44 Table 19: Summary results by sector.................................................................................................57 Table 20: Summary results by country ..............................................................................................59

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Executive Summary
The search of the term marketing innovation in the literature returns plenty of results. Most of these, however, refer to the marketing of technological innovation rather than to the innovation in marketing. Only recently, theorists seem to broaden innovation concept incorporating marketing innovation. This thesis aims at defining marketing innovation as a separate form of innovation and proposing an approach to its measurement. Chapter 1 defines the involved terms: marketing and innovation. The evolution of two definitions of marketing (those of AMA and Philip Kotler) is presented indentifying any change throughout the literature. Apart from these established definitions, another point of view is analysed in order to examine if marketing is still alive despite theorists efforts to redefine it. Innovation is also defined in reference to papers that follow a broader and less technical definition and consider it as a key driver of the economy. Chapter 2 defines marketing innovation while it sets the borderlines between marketing and the other forms of innovation. A change in design may be interpreted as a product innovation but also as a marketing innovation. So, distinguishing characteristics are given between marketing and the other types of innovation: product, process and organisational. Moreover, types of marketing innovation are described according to the marketing mix concept. In order to focus on marketing innovation measurement, established scorecards from Europe, US and Australia but also alternative approaches to innovation measurement are presented in chapter 3. Although, there are many differences between the analysed approaches, some common points are proposed so as to indentify the new trends in innovation measurement. Chapter 4 specifies innovation measurement in the marketing field. This analysis is based on the conclusions of the previous chapter but also on two new references: an analysis for service innovation measurement and a systemic approach to the dimensions of technological and nontechnological innovations. To check the practical implications of the proposed approach, chapter 5 presents an analysis based on the Fourth Community Innovation Survey (CIS4). The results are used to indentify any limitations and proposals for further improvements.

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1 INTRODUCTION
To understand marketing innovation, it would be useful first to establish the meaning of the involved terms: marketing and innovation. Both terms have raised the interest of practitioners and theorists in the last decades. According to Drucker (1955),because it is its purpose to create a customer, any business enterprise has two and only these two- basic functions: marketing and innovation. They are entrepreneurial functions.

1.1 Defining Marketing

Established definitions The American Marketing Association (AMA) has been traditionally accepted to define what marketing is. The first official definition of marketing was adopted in 1935 and referred to marketing as the performance of business activities that direct the flow of goods, and services from producers to consumers (www.marketingpower.com/). Fifty years later, marketing is described as: the process of planning and executing the conception, pricing, promotion and distribution of idea, goods and services to create exchange and satisfy individual and organizational objectives. Gronroos (1994) argues that one of the most important implications of this definition is that execution has been given the same priority as planning. Although this definition affected significantly marketing literature in the following decades, there has been a strong criticism towards it. A main argument is that the above definition emphasising on the 4 Ps (product, price, promotion, place) focuses on mere tactical issues rather than the broader goal of satisfying customer needs (Zinkhan and Williams, 2007). It is mostly production-oriented because it starts from the firm rather than from the market. In August 2004, AMA released a new definition of marketing that managed to include the important part of value creation: marketing is an organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders (www.marketingpower.com/). According to Zinkhan and Williams (2007), this definition encompasses new notions about marketing: marketing is not a single event but rather a combination of many activities (set of processes), a broad number of people or firms are interested in the outcomes of marketing activities (stakeholder) in comparison to the former statement (individual and organizational objectives) and marketers should consider how their particular offerings address a buyers underlying interests and needs (value creation).

AMA seems clearly to have been influenced by the rise of internet, computing science and the emergence of internet marketing, e-marketing and customer relationship marketing. One argument against the above definition is that it implies that marketing is considered as the responsibility of one specific organisational function or department. A key focus of marketing in the twenty-first century is the engagement of the entire organization in marketing. This is comprised in the statement of David Packard co-founder of Hewlett Packard: marketing is too important to be left just to the marketing department. In one of the strongest criticisms, that of Mick David it is claimed: time is running out for halting the dominance of micromarketing and its narrow management orientation (Mick, 2007). Referring to marketers social responsibility, the author states that AMA needs to obtain a macro-marketing orientation towards the long-term consequences beyond their firms, partners and customers.

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<Vlachaki Efi> After three years, AMA updates this definition stating that: marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large (http://www.marketingpower.com). Nancy Costopoulos, Chief Marketing Officer at the AMA, recognises the changing nature of marketing and supports that AMA recognises that shifts in the marketing world warrant a change in the way we define our practice (http://www.newcommreview.com/?p=1104). The new definition includes the role that marketing plays within society at large, and defines marketing as a science, educational process and a philosophy - not just a management system. The new definition incorporates both the traditional view (the exchange paradigm) and the current one (the value-creation paradigm). According to AMA, more than 70% of their membership viewed the new definition as an improvement (AMA, 2008). Nevertheless, there are again some arguments against the newest definition. As it was mentioned before, the new definition incorporates both the exchange and value creation paradigm but still neglects value co-creation. Value co-creation is not a special case of value creation but vice versa. Value creation is a special case of value co-creation in which a single agent such as the producer, the intermediary or even the consumer is dominant. In the case of cocreation, stakeholders contribute in value creation (Jagdish and Can, 2007). Table 1: Marketing definitions according to AMA and Kotler.
Release date Characteristics Scope 1985 The process of planning and executing pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives. 1984 A social process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others. AMAs definitions 2004 An organizational function and a set of processes for creating, communicating and delivering value to customers and for managing customer relationships that benefit the organization and its stakeholders. Kotlers definitions 2003 A societal process by which individuals and groups obtain what they need and want through creating, offering, and freely exchanging products and services of value with others. 2007 The activity, set of institutions and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large. 2006 A societal process by which individuals and groups obtain what they need and want through creating, offering, and freely exchanging products and services of value with others.

Goal

Release date Characteristics Goal

Scope

Similar to the validity of AMAs definitions, Philip Kotlers views on marketing have been also considered a key part of the marketing literature. Kotler (1967) stated that marketing is the analyzing, organizing, planning, and controlling of the firms customer impinging resources, policies, and activities with a view to satisfying the needs and wants of chosen customer groups at a profit. After five years, Kotler introduced the term exchange and referred to marketing as the set of human activities directed at facilitating and consummating exchanges. In 1984, marketing, that had been defined as human activity, is redefined as a social process: Marketing is a social process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others. For the following almost ten years, the definitions that were presented by Kotler did not change from the last one. The only element that was added was that marketing is described not only as social but also as managerial process (Ringold and Weitz, <MBIT, 2009-10> page 3

<Vlachaki Efi> 2007). Both in 2003 and 2006 the marketing definition that was presented was the following: Marketing is a societal process by which individuals and groups obtain what they need and want through creating, offering, and freely exchanging products and services of value with others (Kotler, 2003, 2006). Overall, we could note that established marketing definitions have changed: replacing the term goods/services with the term value and giving more social characteristics to marketing function.

A different approach: Marketing is dead. Long live the marketing definition. According to Dann (n.d.), the child of necessity and invention, born almost 75 years ago, seems to have followed human life expectancy. Although in the past, redefinitions of marketing reversed its death, during the last two decades, rumours about the decline of marketing have increased. In 2004, AMAs definition enabled marketing function to catch up the new era of relationship management, communication, delivery and creation of value. Only after three years, AMA tries to redefine marketing once again. The author interprets this as an attempt to face significant weaknesses in marketings infrastructure, focus on the benefit for consumer, society and organization and thus lengthen the lifespan of marketing (Dann, n.d.). In the last decade, several scholars have noted the decline of marketing and questioned the marketing concept (marketing myopia). Holbrook and Hulbert (2002) try to explain this change in their article Elegy on the death of marketing. More specifically, Holbrook and Hulbert argue that marketing and more specifically the mix of 4 Ps was used as a means of closing the gap between producers and consumers. The rise of Internet and consequently the appearance of the necessary tools for mass customisation, though, reduced this gap and started to displace marketing (as cited in Marriott, n.d.). Although, marketing function -as it has been defined- seems to fail to face some new trends, it is quite difficult both for the companies and scholars to question that customer orientation is tightly connected with corporate success. So, marketing concept will continue to be a fundamental parameter for success. The interesting part may be the connection of marketing and innovation that Richard, Womack and Allaway (1992) propose as an evolution of marketing concept. To remain competitive and survive into twenty-first century, companies can combine the Marketing Concept and cross-fertilization of ideas for innovative strategies. From the above analysis, one may conclude that there is a deep argument about how exactly marketing should be defined. To sum up both fundamental and alternatives approaches, one may conclude that in order to keep marketing alive we should take into account that: Marketing is not an exclusive responsibility of marketing department. It should not be principally positioned as an organizational but as a broader phenomenon involving multiple aspects of society. It is not a single event but a set of processes. It does not imply only action but also planning. It is about exchanging products and value with stakeholders.

1.2 Defining Innovation

Similarly to marketing, there are various definitions of innovation in the literature. For this thesis, it would be useful to refer to papers that follow a broader and less technical definition and consider <MBIT, 2009-10> page 4

<Vlachaki Efi> innovation as a key driver of the economy. One of the first economists that tried to define innovation was Joseph Schumpeter. According to Schumpeters theory, innovation is doing things differently in the realm of economic life (as cited in Sweezy, 1943, p.93) and is also the causative factor in the economy. By this definition, Schumpeter did not refer to a vicious cycle of change (the cause of change is change) but to the fact that innovation is the activity or the function of a particular set of individuals, entrepreneurs. For Schumpeter, entrepreneurial change includes five manifestations: i. the introduction of a new (or improved) good, ii. introduction of a new method of production, iii. the opening of a new market, iv. the exploitation of a new source of supply and v. the re-engineering/organization of business management processes (as cited in Oslo Manual, 2005, p.29). Also Drucker has followed a non-technological approach to the analysis of innovation and its forms. According to the management guru, innovation is the act that endows resources with a new capacity to create wealth. It can be defined from the supply side (changing the yield of resources) or from the demand side (changing the value and satisfaction obtained from the resources by the consumer (Drucker, 2002). Drucker supports that innovation does not have to be technical; it may be economic or social. Actually, social innovations such as the newspaper or insurance are responsible for larger impact than technical ones. Both the first and second edition of the Oslo Manual1 focuses only to the first two forms of innovations that Schumpeter has defined (Technological Product and Process innovation, TPP) (OECD, 1997). Nevertheless, the third edition broadens the overall innovation concept. Innovation has been recognised as the implementation of a new or significantly improved product (good or service), or process, a new marketing method, or a new organisational method in business practices, workplace organisation or external relations (OECD, 2005). A firm does need to implement exclusively a new product or process to be characterised as innovative. No matter the form, a common feature of an innovation is that it requires to have been implemented. A narrow definition that takes into account the product and process innovation, as the first and second edition does, is not necessarily incorrect. The classification of innovation depends on the policy and research needs. According to the Oslo Manual (2005), narrower definitions can be useful in many cases particularly for comparisons of innovation across sectors, firm size categories or countries. This paper focuses on marketing innovation; it would be thus useful to use the new classification of the Oslo Manual into: product, process, organisational and marketing innovation. Types of innovation A product innovation is the introduction of a good or service that is new or significantly improved with respect to its characteristics or intended uses. As long as a new or significantly improved use is occurred, a product innovation may be based even on a minor change to technical specifications. The term product innovation may refer both to goods and services. Product innovations in services may include significant improvements in how they are provided, the addition of new functions or characteristics to existing services, or the introduction of entirely new services. Examples of product innovations may be the introduction of a new good/ service or a change in materials, components that enhance the performance such as the efficiency of a good or the speed of a service.

The Organisation for Economic Co-Operation and Development's document "The Measurement of Scientific and Technological Activities, Proposed Guidelines for Collecting and Interpreting Technological Innovation Data", also known as the Oslo Manual, is considered as the most important international source of guidelines for the collection and use of data on innovation activities in industry. The first edition issued in 1992, the second in 1997 and the last one in 2005.

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<Vlachaki Efi> A process innovation is the implementation of a new or significantly improved production or delivery method. This includes significant changes in techniques, equipment and/or software. The intention of a process innovation is the decrease of unit costs in production or delivery, the increase of quality, or the production and the delivery of new or significantly improved products. Examples of process innovation may refer to the involvement of new techniques, equipment and software in new production methods or the involvement of new logistics, equipment and software in new delivery methods. There is a clear distinction between product innovation in goods and process innovation. In the case of services, however, this distinction is not so clear and some determinants are proposed by the Oslo Manual (OECD, 2005): product innovation in services refers to new or significantly improved characteristics of the service, process innovation in services refers to new or significantly improved methods/ equipments/ skills used to perform the service, if both changes occur, innovation can be considered both product and process.

An organisational innovation is the implementation of a new organisational method in the firms business practices, workplace organisation or external relations. Organisational innovations can be intended to increase a firms performance by reducing administrative costs or transaction costs, improving workplace satisfaction (and thus labour productivity), gaining access to non-tradable assets (such as non-codified external knowledge) or reducing costs of supplies. Examples of organisational innovation are new types of collaborations with research organisations or customers or new methods of integration with suppliers. What differs an organisational innovation from an organisational change is that it has not been used before in the firm and it is the result of strategic decisions taken by management. Another point that needs further clarifications is the distinction between organisational and process since they may aim at common goals such as decreasing costs. The determinants that the Oslo Manual proposes are based on the fact that process innovation deals with equipment, software and specific techniques while organisational innovation deals with people and the organisation of work (OECD, 2005). So: process innovation refers to new or significantly improved methods in the production or the supply part so as to decrease product cost or increase product quality. organisational innovation refers to the first use of new organisational methods in business practices, internal and external relations. if both changes occur, innovation can be considered both process and organisational.

A marketing innovation is the implementation of a new marketing method involving significant changes in product design or packaging, product placement, product promotion or pricing. Marketing innovations are aimed at better addressing customer needs, opening up new markets, or newly positioning a firms product on the market, with the objective of increasing the firms sales. Similarly to organisational innovation, marketing innovations must be part of a new marketing concept or strategy that represents a significant departure from the firms existing marketing methods. In the following section, marketing innovation will be analysed further. Alternative definitions will be presented while differences between marketing innovation and other forms will be described.

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2 MARKETING INNOVATION
2.1 Defining Marketing Innovation
A search on marketing innovation in innovation literature will return many results. Most of these results, though, describe how to market an innovation rather than innovation in marketing function. In fact, innovation and marketing have been analysed deeply in the last decades. Drucker (1955) considered them as the only two basic business functions. Nevertheless, they are always referred as two separate functions. Only recently, scholars and organisations seem to refer to the innovation in the marketing field. One of the early references to marketing innovation belongs to Theodore Levitt. Apart from his contribution to the theory of marketing myopia, the economist has tried to analyse the perspective of growth and profit through planned marketing innovation almost 50 years ago. According to Levitt (1962), marketing is a neglected frontier since most marketing innovations were characterised as accidental and originated from outside the central cores of the industries in which they have ultimately developed. He argued that product innovations demanded a creative thought and imagination about new marketing methods. After three decades, only few papers that define marketing innovation can be found. According to Rekettye (2002), in order to determine the scope of innovation, one should take into consideration not only products, services, technologies and operation processes but also marketing. As it will be analysed below, there may be a combination of product and marketing innovation but there may be also pure marketing innovations (marketing-mix-related type innovations) as a result of R&D activity within the marketing system. This focus on R&D within the marketing function seems relevant to the marketing R&D concept that Levitt (1962) has developed and refers to the importance of the market research and the development of: i. new solutions to marketing problems, ii. new marketing instruments, iii. more efficient ways of using existing ones. A customer-focused definition has been given by Moore (2004). The author argues that marketing innovation improves customer-touching processes either in marketing communications (use of the Web and trailers for viral marketing of The Lord of the Rings movie trilogy) or in consumer transactions (Amazons e-commerce mechanisms and eBays online auctions). Apart from defining different types of innovation, Moore has also matched them to the stages of product life cycle. More specifically, he matches the initial phases with disruptive, application innovation, and product innovation. As the product matures, process innovation, experiential innovation and marketing innovation are important while in the declining phase business model innovation and structural innovation can be used. Chen (2006) studied marketing innovation and more specifically its value considering marketing innovation as the development of new marketing tools and methods focusing on two forms of marketing innovation: one that allows firm to acquire consumer information and another that reduces consumer transaction costs. The most established definition, though, seems to have been given by OECD in the third edition of the Oslo Manual: marketing innovation is the implementation of a new marketing method involving significant changes in product design or packaging, product placement, product promotion or pricing (OECD, 2005). New marketing methods in the concept of the marketing mix could be a comprehensive reference to all these three definitions.

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2.2 Comparison to other types of innovation

In literature, marketing innovation has been referred many times as an example of process innovation. Process innovations are innovations in the way an organization conducts its business, such as in the techniques of producing or marketing goods or services (Schilling, 2008). Moreover, the analysis of the terms product and marketing innovation may cause a very basic question. Since product is the first element of the marketing mix, should product innovation be perceived as a different category from marketing innovation or a sub-category of it? To be able to analyse and measure marketing innovation as a separate form of innovation, it is necessary to define the borderlines between marketing and the other forms of innovation. As presented above, the third edition of the Oslo Manual refers to the basic differences between the various types of innovation. Table 2 sums up the comparison of marketing innovation to the other innovation forms. Table 2: Differences between types of innovation
innovation types product others significantly improved functional or user characteristics activities aimed at decreasing unit costs or increasing product quality marketing a significant change in the design of an existing product activities aimed at increasing sales volumes or market share

process

organisational

clarifications may be required for innovations that are both organisational and marketing. In this case innovations should involve new marketing methods (not just sales activities).

Rekettye (2003) developed a matrix so as to depict the confusing relationship between marketing and product innovations. Four combinations may emerge from this interaction: i. product-related marketing innovation, ii. marketing-mix related innovation, iii. product innovation and iv. absence of innovation. Table 3: The marketing- and product-innovation matrix
the implemented marketing mix new product-related marketing innovation the product or service new not new pure product innovation

(Source: Rekettye, 2003, p.48)

Pure product innovation refers to the launch of new products to the market using the existing marketing infrastructure that has been proven successful in the marketing of other products. Pure product innovation may be successful especially in the case of discontinuous product innovations. Nevertheless, when marketing function does not catch up even with significant product innovations, change in the market characteristics may be neglected and the launch may not be successful. <MBIT, 2009-10> page 8

not new

marketing-mix-related innovation

not an innovation

<Vlachaki Efi> According to Rekettye (2003), the launch of breaking with the past products generally requires a new marketing approach. In this case and similarly to product innovations, marketing managers experiment with different marketing approaches till one of them succeeds and becomes dominant. Schubert (2009) through his analysis on the German Community Innovation Survey 2007 (CIS 2007) concluded that marketing innovations in contrast with the organisational- help to increase turnover share with new products and help to reduce costs. This suggests the positive effect of marketing innovations on product innovation. In other words, the introduction of a new product requires adjustment to marketing. Marketing-mix-related innovations refer to pure marketing innovations and as it was mentioned before they are the results of R&D activity within the marketing system. They can be further grouped into two categories: i. one including marketing innovations that revolutionise a part of the marketing system (e.g. innovative changes in the distribution system) and ii. one that has the capacity to deal with different products or services (e.g. redefinition of the market with the use of already well-known products in a new combination). Apart from the success of the interaction between product and marketing innovation, pure marketing innovations can be successful without acting as complementary to new products. In a study in the food industry, Bhaskaran (2006) finds that SMEs focusing on marketing innovations are profitable and can compete also with larger enterprises (as cited in Schubert, 2009). Of course, the above statement does not imply that the pure marketing innovation is the only right decision for a firm. It depends on the characteristics of the firm and its environment. For instance, Schubert (2009) supports that market environment has considerable influence on how firms choose their innovation strategy. Firms with a particularly weak or particularly dominant position on the market tend to become pure non-technological innovators, while firms with an intermediate market share are much more likely to have a broad innovation strategy consisting of each of the four types of innovation. Apart from the market structure also the internal and external assets influence a corporate innovation strategy. The relationship between inputs and marketing innovation will be analysed further in section 4.

2.3 Innovation in the marketing mix

Marketing innovations can refer to any marketing method (product design/ packaging, placement, pricing, promotion) as long as it is used for the first time by the firm. Marketing innovation in product design Marketing innovations may include significant changes in product design. Theses changes refer to the form and the appearance of the product and they do not alter any functional or user characteristics. The goal of such marketing innovations is to give products a distinctive look and appeal to a new market segment. Marketing innovation in product design may include: implementation of a significant change in the design of a product to give it a new look and widen its appeal, implementation of a fundamentally new design intended to give the product a distinctively exclusive look.

Example of marketing innovation in product design is the launch Nokias designer covers for the mobile phones, American girl doll by Mattel, Help Remedies packaging. Marketing innovation in product pricing Innovations in pricing involve the use of new pricing strategies to market the firms goods or services. They may include: <MBIT, 2009-10> page 9

<Vlachaki Efi> introduction of a new method that allows customers to choose desired product specifications on the firms Web site and then see the price for the specified product. first-time use of a method for varying the price of a good or service according to demand for it. first-time use of in-store special offers that are only accessible to holders of the stores credit card or reward card.

New pricing methods whose sole purpose is to differentiate prices by customer segments are not considered innovations. Example of marketing innovation in price is the pricing structure of Dell for online specification of a product and its direct calculation of the price of the product. Another example of marketing innovation, and more specifically an example of proactive marketing is the Name Your Own Price system (NYOP) that enabled for the first time online users to name their price for airline tickets, hotel rooms, and car rentals. Marketing innovation in product placement New marketing methods in product placement primarily involve the introduction of new sales channels. Sales channels here refer to the methods used to sell goods and services to customers, and not logistics methods (transport, storing and handling of products) that deal mainly with efficiency. Marketing innovations in product placement may include: first-time introduction of product licensing, first-time introduction of direct selling or exclusive retailing, implementation of a new concept for product presentation such as sales rooms for furniture that are designed according to themes, allowing customers to view products in fully decorated rooms, implementation of a personalised information system, e.g. obtained from loyalty cards, to tailor the presentation of products to the specific needs of individual customers.

An example of marketing innovation in placement may be considered Billboard music compilations that first legalised internet as a distribution channel of music in US. Dells innovation includes also a marketing innovation in placement since it replaced the conventional stores with internet. Marketing innovation in product promotion New marketing methods in product promotion involve the use of new concepts for promoting a firms goods and services. They may include: the first use of a significantly different media or technique such as product placement in movies or television programmes, or the use of celebrity endorsements, first-time use of trademarks (as it will be presented in section 4.4.1, trademarks may be used to protect marketing innovation also in product design, pricing and placement), first-time use of product placement in movies or television programmes, introduction of a fundamentally new brand symbol intended to position the firms product on a new market, first-time use of product seeding through opinion leaders, celebrities or particular groups that are fashion or product trend setters.

Examples of marketing innovation in promotion are: one of the first uses of banner adds by AT&T and the successful viral campaign of Hotmail based on the email-to-a-friend function.

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3 INNOVATION MEASUREMENT
In a report to the US Secretary of Commerce, the Advisory Committee on Measuring Innovation in the 21st Century Economy (2008) suggests, innovation measurement to date has been largely piecemeal, incomplete, and accidental. According to an innovation-oriented consulting company (Innovaro, n.d.), however, after years of disinterest, the measurement of innovation has gained much attention. The increasing corporate need for tracking and benchmarking their innovation performance is a main reason for this change. Similar to the companies, governments need to measure their innovation capability and competiveness so as to evaluate their venture capital fund but also their competency to attract investments. Both academic and private sector researchers aim at indentifying metrics for innovation measurement. In the following paragraphs different approaches in innovation measurement are presented.

3.1 Established Innovation Metrics

3.1.1 European Innovation Scoreboard (EIS)
European Innovation Scoreboard (EIS) is an attempt initiated by the European Commission in order to compare the innovation performance of EU Member States. EIS annual publications aim at tracking and benchmarking the relative innovation performance of EU Member States, under the EU Lisbon Strategy2 . According to the 8th edition of EIS (PRO INNO Europe, 2009), the methodology for the comparative assessment of innovation performance has been revised compared to that of 2007. The analysis of trends over time is now based on changes in the absolute values of the indicators over a five-year period, rather than the previous approach of measuring trends relative to the EU average. The change in the new methodology reflects the appearance of different forms of innovation (e.g. technological and non-technological innovation) in different sectors (e.g. manufacturing and services). Table 4: EIS, 7 dimensions of innovation performance.
1 ENABLERS (captures the main drivers of innovation that are external to the firm) 1.1 Human resources: the availability of high-skilled and educated people. 1.2 Finance and support: the availability of finance for innovation projects and the support of governments for innovation activities. 2 FIRM ACTIVITIES (captures innovation efforts that firms undertake recognising the fundamental importance of firms activities in the innovation process) 2.1 Firm investments: covers a range of different investments firms make in order to generate innovations. 2.2 Linkages & entrepreneurship: captures entrepreneurial efforts and collaboration efforts among innovating firms and also with the public sector. 2.3 Throughputs: captures the Intellectual Property Rights (IPR) generated as a throughput in the innovation process and Technology Balance of Payments flows. 3 OUTPUTS (captures the outputs of firm activities) 3.1 Innovators: the number of firms that have introduced innovations onto the market or within their organisations, covering technological and non-technological innovations. 3.2 Economic effects: captures the economic success of innovation in employment, exports and sales due to innovation activities. (Source: PRO INNO Europe, 2009, p.8)

During the meeting of the European Council in Lisbon (March 2000), the Heads of State or Government launched a "Lisbon Strategy" aimed at making the European Union (EU) the most competitive economy in the world and achieving full employment by 2010.

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<Vlachaki Efi> Each national innovation performance is measured through its relationship with some dimensions. In the last EIS publication, the number of dimensions have been increased to 7 and grouped into 3 main categories: enablers, firm activities and outputs. Each dimension can be also analysed into a number of indicators. In order to be able to directly compare the annual reports and explore the potentiality of new statistical sources, European Commission intends to maintain the above methodology. Table 5: EIS, 29 indicators of innovation performance.
1 ENABLERS 1.1 Human resources 1.1.1 S&E and SSH graduates per 1000 population aged 20-29 (first stage of tertiary education)3 1.1.2 S&E and SSH doctorate graduates per 1000 population aged 25-34 (second stage of tertiary education) 1.1.3 Population with tertiary education per 100 population aged 25-64 1.1.4 Participation in life-long learning per 100 population aged 25-64 1.1.5 Youth education attainment level 1.2 Finance and support 1.2.1 Public R&D expenditures (% of GDP) 1.2.2 Venture capital (% of GDP) 1.2.3 Private credit (relative to GDP) 1.2.4 Broadband access by firms (% of firms) 2 FIRM ACTIVITIES 2.1 Firm investments 2.1.1 Business R&D expenditures (% of GDP) 2.1.2 IT expenditures (% of GDP) 2.1.3 Non-R&D innovation expenditures (% of turnover) 2.2 Linkages & entrepreneurship 2.2.1 SMEs innovating in-house (% of SMEs) 2.2.2 Innovative SMEs collaborating with others (% of SMEs) 2.2.3 Firm renewal (SME entries plus exits) (% of SMEs) 2.2.4 Public-private co-publications per million population 2.3 Throughputs 2.3.1 EPO patents per million population 2.3.2 Community trademarks per million population 2.3.3 Community designs per million population 2.3.4 Technology Balance of Payments flows (% of GDP) 3 OUTPUTS 3.1 Innovators 3.1.1 SMEs introducing product or process innovations (% of SMEs) 3.1.2 SMEs introducing marketing or organisational innovations (% of SMEs) 3.1.3 Resource efficiency innovators, unweighted average of: Share of innovators where innovation has significantly reduced labour costs (% of firms) Share of innovators where innovation has significantly reduced the use of materials and energy (% of firms) 3.2 Economic effects 3.2.1 Employment in medium-high & high-tech manufacturing (% of workforce) 3.2.2 Employment in knowledge-intensive services (% of workforce) 3.2.3 Medium and high-tech manufacturing exports (% of total exports) 3.2.4 Knowledge-intensive services exports (% of total services exports) 3.2.5 New-to-market sales (% of turnover) 3.2.6 New-to-firm sales (% of turnover) (Source: PRO INNO Europe, 2009, p.9)

S&E refers to science and engineering graduates while SSH refers to social sciences and humanities graduates.

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<Vlachaki Efi> Overall innovation performance is measured by a composite index, the Summary Innovation Index. The Summary Innovation Index (SII) is a composite of 29 indicators going from a lowest possible performance of 0 to a maximum possible performance of 1. Overall innovation performance is measured by a composite index, the Summary Innovation Index. The Summary Innovation Index (SII) is a composite of 29 indicators going from a lowest possible performance of 0 to a maximum possible performance of 1. Although EIS has been widely accepted as an innovation-benchmarking tool, there are some criticisms on its reliability. Some of the key points of this position are: the bias of some EIS indicators towards high-tech sectors, insufficient criteria for the selection of EIS indicators, data availability and quality problems, incorrect definition of optimal innovation capacity (more is not always better) and statistical problems such as multicollinearity, missing data, differences in indicators between countries (PRO INNO Europe, 2009).

Taking into account all the existing and new challenges, EIS aims at focusing in the following four directions: measuring new forms of innovation, assessing overall innovation performance, improving comparability at national, regional and international levels and measuring progress and changes over time (PRO INNO Europe, 2009).

3.1.2 Tracking the State of Innovation in the American Economy

Measuring Innovation in the 21st Century Economy Advisory Committee, set up by US Department of Commerce, urges the government, the business community and researchers to work together to improve the understanding and measurement of innovation. To improve the measurement of innovation and its impact on the US economy the Advisory Committee recommends that innovation measurement should be a dynamic process that demands a continuous review. Updating the framework for measuring the performance of the national economy is an essential element in the governments program to measure innovation. The four major elements of this program include: refining the National Income and Product Accounts (NIPAs) to permit estimation of industrylevel measures of total factor productivity, creating an innovation supplementary account, improving service sector data and improving the measurement of intangibles (particularly intellectual property and improved measures of technology licensing activity) beyond scientific and engineering R&D and ownaccount software development (A.C., 2008).

As far as the business community is concerned, one of the guiding principles endorsed by the Advisory Committee was that innovation data collection efforts should build on the way firms assess the effectiveness of their innovative activities. Insights from individual firms and other organizations can be integrated with those from government efforts to assess innovation activities and performance more comprehensively (A.C., 2008). <MBIT, 2009-10> page 13

<Vlachaki Efi> Similar to the dimensions that the eight edition of EIS 2008 proposed, the Alliance for Science & Technology Research in America (ASTRA 2007) proposes 14 signs and specific indicators categorised into four main groups: Input factors, Process Factors, Outcome Factors, Context Factors. Table 6: ASTRAs indicators of innovation performance.
1 INPUT FACTORS 1.1 Research and Development (R&D expenditures, Patents, Scientific publications, Expenditure on tertiary education) 1.2 Talent (Tertiary Education in Science and Technology, R&D personnel, Verbal and Math Proficiency, Population completing secondary education, Participation in life-long learning) 1.3 Capital (Gross Capital Formation, Investment in Equipment and Software, Angel Investment, Venture Capital, SBIR Funding, IPO, Stock Market Value, R&D Tax Incentives) 1.4 Networks (Computers and Broadband Deployment, Technology Alliances, Federal CRADAs and Technology Transfer, University Spin-Outs, Innovative SMEs co-operating with others) 2 PROCESS FACTORS 2.1 Management 2.2 Product Development (Enterprise innovation processes, Speed in Launching a New Product) 2.3 Efficiency 2.4 Process Factors (SMEs innovating in-house, Innovation expenditures by enterprises, SMEs who introduced an organizational innovation) 3 OUTCOME FACTORS 3.1 Output (New Products and Services Introduced, Outcomes of Enterprise Innovation Activity, Sales of new-tomarket products, Sales of new-to-firm products, New community trademarks, New community designs) 3.2 Impact (Employment in high-tech manufacturing, Employment in high-tech services, Trade in highly R&Dintensive industries and high technology industries, High tech Exports, Technology trade, Productivity, Enterprise Birth and Death Rates, High Tech Jobs Gained and Lost) 4 CONTEXT FACTORS 4.1 Macroeconomic (GDP, Inflation) 4.2 Policy (Public Policies) 4.3 Infrastucture 4.4 Mindset (Public Attitudes and Sources of S&T Information, Wish to Own Ones Business, Value Placed on Creativity) (Source: ASTRA, 2007, p.1)

Compared to the European Scorecard, US perspective possesses several common points. First, of all both analyses are based on Input factors/ Enablers, Process factors/ Firms Activities, Outcome Factors/ Outputs. There are also many common indicators such as R&D expenditures, Venture Capital, Innovative SMEs, IPO. However, there are some differences in the taxonomy of these indicators. For instance, according to EIS 2008, patents should be considered a throughput indicator where as according to the taxonomy ASTRA proposes, patents should an input indicator. The above framework adds, also, a fourth key category of indicators that incorporates factors of the macro environment that European Scorecard does not suggest.

3.1.3 Backing Australia's Ability

The Australian Innovation Scorecard, developed in 2002 and updated in 2004, was first produced as part of a whole-of-government Innovation Statement, led by the then Department of Education. It was designed to reflect the flow of the innovation process and to allow benchmarking against other OECD countries (Australian Bureau of Statistics, 2008). As it is mentioned in Backing Australias Ability Innovation Report (Australian Government, 2007) the scorecard is not designed to be prescriptive in the sense that Australia should be attempting to be the leader in every indicator. Each indicator provides only a partial picture of innovative performance, so an increase in any one indicator does not necessarily mean a better outcome for the whole economy. The Australian Innovation Scorecard 2006 is the third Australian attempt for innovation measurement. The <MBIT, 2009-10> page 14

<Vlachaki Efi> indicators do not differentiate significantly from the indicators of previous scorecards. The new scorecard includes 15 indicators that are grouped into 6 categories as the previous one: Table 7: AIS 15 indicators of innovation performance.
1 KNOWLEDGE CREATION (science and technical articles per million of the population) 1.1 R&D expenditure in government and higher education sectors as a % of GDP 1.2 Scientific and technical articles per million population 1.3 Number of United States (US) Patents per million population 1.4 Business sector R&D expenditure (BERD) as a % of GDP 2 HUMAN RESOURCES (science graduates in employment) 2.1 Percentage of workforce with tertiary education 2.2 Number of Science Graduates per 10,000 persons in labour force 2.3 Researchers per 10,000 persons in the labour force 3 FINANCE (investment in venture capital as a percentage of GDP) 3.1 Investment in Venture Capital as a % of GDP 4 KNOWLEDGE DIFFUSION (internet usage and broadband subscribers) 4.1 Investment in ICT as a % of business sector gross capital formation 4.2 Internet users per 1,000 population 4.3 Broadband subscribers per 1000 population 4.4 Investment in new machinery and equipment as a % of GDP 5 COLLABORATION (innovators with collaboration activity) 5.1 Percentage of innovators with collaboration activity 5.2 Breadth of international science and engineering collaboration 6 MARKET OUTCOMES (businesses selling over the internet.) 6.1 Average annual growth in multi-factor productivity between 1999 and 2003 6.2 Percentage of turnover from new goods and services innovations 6.3 Percentage of innovating businesses in the economy 6.4 Percentage of businesses using the internet to sell goods and services (Source: Australian Government, 2007, p.123)

In comparison to the last edition of EIS, it has been noticed that they both refer to the enabling factors: human resources and finance. A different point for the Australian Scorecard is its knowledge driven approach than includes seven indicators relative to knowledge creation and diffusion. EIS refers also to knowledge diffusion through the category throughputs. Nevertheless, it does not possess the same interest with the Australian Scorecard towards the use of internet usage and broadband subscribers and in general towards ICT. According to the innovation report Backing Australia's Ability, Government's investment focused on three key elements in the innovation process: strengthening Australia's ability to generate ideas and to undertake research, accelerating the commercial application of ideas and developing and retaining Australian skills (Australian Bureau of Statistics, 2008).

3.2 Different approaches to Innovation Metrics

3.2.1 LBIO (Literature-Based Innovation Output) data
A quite different from the above approaches is the Literature-Based Innovation Output (LBIO) indicator. This type of data is not based on observing the innovative behaviour of individual firms but on screening specialist trade journals for new-product announcements. Traditionally used data, R&D figures, may possess significant advantages as a well-defined indicator used for many years of innovation research; nevertheless, the exclusive use of R&D data does not take into account the innovation that it is irrelevant to the R&D activities. <MBIT, 2009-10> page 15

<Vlachaki Efi> LBIO data, on the other hand, are more consistent with definition of innovation as they refer to the market introduction of new products. As it is mentioned in the introductory section, innovation is more than the generation of ideas; it is the implementation of those ideas into some new device or process (Melissa, 2008). Moreover, screening journals for new-product announcements rather than surveying a statistically significant sample of firms prevents the research from high cost and high non-response rates. A key argument against LBIO method is that the propensity to announce the innovation in a journal is different across the industries and between large and small companies and may affect the reliability of this type of data. Propensities to announce also differ for product and process innovations. LBIO databases may be biased towards product innovation since firms do not tend to announce internal process innovations. In order to prove that LBIO data can be considered as valuable as traditional innovation data, Gerben van der Panne compared Community Innovation Survey (CIS) that performed in 1996 -a reliable frame of reference- with a newly built Dutch LBIO database. In the below table, there is a summary of the comparison between these two methods (Gerben, 2007, p.500): Table 8: LBIO data and CIS as innovation indicators.
LBIO CIS (Source: Panne, 2007, p.500) Indicator innovation counts R&D figures Data collection method screening trade journals survey stratified journals

According to the comparative analysis of both databases, LBIO data were found to be substantially biased against the occasional occurrence of innovation where as they are much more precise within the group of permanent innovations. Given the vast majority of permanent innovations reports, the above bias cannot be considered significant enough so as to affect the reliability of LBIO data. Moreover, although some industries lack any trade journal in which to announce new products, the distribution of innovators across industries does not systematically differ between LBIO and CIS data. Comparative analysis showed, also, that LBIO data are unbiased towards firm size. Regarding the innovation efforts, the firms identified in the LBIO database outperform those identified in the CIS database and are at least as innovative in terms of R&D expenses and new-product turnover. Gerben (2007) concludes in the absence of any severe biases, consciously compiled LBIO data can be considered a fully fledged alternative to traditional innovation data. Coombs, Narandren and Richards (1996), suggest that LBIO indicator should not be considered as a substitute for the traditional range of indicators but as a useful complimentary approach.

3.2.2 A smoot for measuring innovation

Measuring innovation is like reckoning by smoot4 Shapiro Amram has stated trying to describe the complexity of innovation measurement. The smoot is a non-standard unit of length that when it was first defined was equal to 170.2 centimeters (the height of Oliver Smoot). Using this specific metric, the Harvard Bridge is almost 364.4 smoots (364.4 smoots and an ear). Nevertheless, using the height of Stephen Smoot or Sherry Smoot (Olivers children who attended also MIT) the bridge is equal to 334.8 smoots or 387.6 smoots. Innovation measurement is pretty like the measurement of Harvard Bridge: there is not a single measurement unit. This does not necessarily imply that research on innovation measurement is in its infancy. The nature of innovation makes this part difficult since the novelty of an innovation may be so high that it abolishes the pre-set measuring
Crossing the Massachusetts Avenue Bridge, MIT students found it difficult to tell how far away they were from the M.I.T. campus whenever there was a fog. To solve this problem, Oliver Smoot and his fraternity brothers painted special marks every ten smoots which means ten times the height of Oliver Smoot.
4

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<Vlachaki Efi> system. A smoot, a variable measure that is redefined according to the time reference, the company and the industry is efficient enough to face up this complexity since the continuous review helps the measurement system to keep up with the novelty of each innovation. Shapiro (2006) proposes an approach that matches a fixed measure (Percent of Revenue from New Products) with a variable one (Percent of Revenue from New Platforms). Percent of Revenue from New Products is a widely used measure is that reflects the rate of regeneration. For instance, when it is equal to 50%, it means that its product line is totally renewed every two years. Although it is an easy to understand measure, there some parameters that could limit its use if they are not clarified. The index defines the rate of newness but not the level of newness. It is not clear if the results refer to a new product or a new stock-keeping unit (sku). An assessment of the regeneration rate that is totally based on this measure may also result in incorrect conclusions. The difference in the index of two companies may come from the difference between the product lifecycles of the industries that the companies operate in. Industries with short product lifecycle (e.g. electronics) usually have shorter time frame compared to industries with long lifecycle (e.g. chemical industry). Last but not least, the measure, based on the sales of new skus, is biased towards product innovation while it ignores other types of innovation such as marketing innovation or service innovation. To counterbalance the weaknesses of this unsophisticated measure, the author proposes the combined use with another common though variable- measure that is called Percent Revenue from New Platforms. A key benefit of this measure is that it applies to many types of innovation apart from the common ones (technical and product). The use of these two measures gives us info not only about the product rate of change but also the quality of newness in the new product revenue. The below table based on the above two dimensions gives four categories of innovative corporate profile. Relating these two measures one may obtain information not only about the patterns of new products but also the patterns of renewal (Shapiro, 2006). Table 9: Percent of Revenue of New products in relation with that of New Platforms.
high Companies with a high rate of product change but of low innovation content. This type may be common in fashion-dominated industries where the customers expect new products but not necessarily innovative ones. However, in order to survive in a dynamic environment companies should not ignore innovation through new platforms. Companies with a settled product portfolio of repeated cycles of cost reduction. The need to survive in a cost-competitive environment does not let them to invest in innovation. It is difficult for them to react to any innovation may emerge from competition. Companies with a high rate of product change that often cannibalizes older products based on obsolescent platforms. Innovation comes both form new products and new platforms.

Percent of Revenue From New Products

Companies with high new product development throughput although it is doubtable if the exploitation of the innovation is successful. Older products are possible to require sustaining investment before the company focuses on new developments.

low low (Adapted from: Shapiro, 2006, p.46-48) Percent of Revenue From New Platforms high

By considering the accounting-based new product measure in concert with the more flexible measure of new platforms, a company can explore meaningfully the quality of its innovation and how sustainable is its innovativeness (Shapiro, 2006).

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3.3 Conclusions for Innovation Measurement

Both established and different approaches may be quite different but there are some proposed points that are commonly accepted. One of the main arguments that have been proposed in the platform concept of Shapiro is that innovation measurement needs to be dynamic. Novelty is required for innovation measurement so as to be able to catch up with any changes in the innovation field. As it is mentioned also by the 21st Century Economy Advisory Committee (2008), innovation measurement is an iterative process that needs to be treated less like a project and more like an ongoing dialogue. The need for innovation metrics update is obvious also in EIS editions that have been revised every year. Hollanders and Cruysen (2008) suggest that future editions of the EIS are expected to deal with four challenges: i. measuring new forms of innovation, ii. assessing overall innovation performance, iii. improving comparability at national, regional and international levels and measuring progress and changes over time. A stronger focus on services, non-technological aspects and outputs of innovation demands a new EIS methodology that confirms the importance of non-R&D innovation. According to a paper prepared from the Danish Centre for Studies in Research and Research Policy (2005), innovation has become more market driven and less R&D driven following the market orientation of the firms nowadays. Innovation policy has taken on a broader scope, increasing emphasis on non-technical forms of innovation, market driven innovation, knowledge transfer and firms capacity to capture and utilize knowledge. The use of non R&D data for innovation measurement is also proposed by LBIO method. According to Gerben (2007), R&D inputs are not sufficient so to guarantee that innovation activities will end up with the market introduction of new products. On the contrary, LBIO data are more consistent with definition of innovation as they refer to the market introduction of new products. Another confirmation about the emergence of non-technological aspects of innovation comes from the 3rd edition of Oslo Manual. While in the previous two editions Oslo Manual was focused on technological innovation, it is the first time that it refers to organisational and marketing innovation. According to the analysis of Schmidt and Rammer (2007), based on German CIS 4 data, it has been showed that the share of firms with technological innovations equals that with non-technological innovations in the manufacturing, while the share of nontechnological innovators exceeds the share of technological innovators in the service sectors. In general, the evolution of national measurements has been presented by Milberg and Vonortas (n.d) who have categorised them into four generations. As it is presented in the below table, the fourth generation of innovation metrics includes knowledge-based networked indicators. According to the authors, both tangible and intangible still matter. Nevertheless, what is also important is the knowledge that underlies their creation and the ways it is developed and diffused. The knowledge orientation in the last innovation metrics can be also noticed in the Australian Scorecard, in which knowledge creation and diffusion represent two of the six categories of innovation metrics. Table 10: Evolution of innovation metrics
1st Generation Input Indicators (1950s-60s) R&D expenditures, S&T Personnel, Capital, Tech intensity etc. 2nd Generation Output Indicators (1970s-80s) Patents, Publications, Products, Quality Change etc. 3rd Generation Innovation Indicators (1990s) Innovation surveys, Indexing, Benchmarking, Innovation capacity etc. 4th Generation Process Indicators (2000 + emerging focus) Knowledge, Intangibles, Networks, Demand, Clusters, Management techniques, Risk/Return, System Dynamics etc.

(Source: Milberg and Vonortas, n.d., p.4)

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<Vlachaki Efi> Apart from knowledge, intangible assets can be also considered a part of the 4th Generation. Jarboe (2007) defined that intangible assets not only represent the knowledge and skill sets of the organization but also they are the vehicle for integrating knowledge into an innovative product, service or process (as cited in Milberg and Vonortas, n.d.). According to the mechanism through which the asset is developed and used in innovation activities, they can be categorised into: human capital (knowledge and skills of individual employees), structural capital (knowledge and skills owned by the firm including databases, intellectual property, trade secrets, business routines and processes, organizational competencies etc.) and relational capital (knowledge and resources embodied in external stakeholders including R&D collaborators, suppliers and customers).

The fact that intangible assets do not exist in physical adds a difficulty in their measurement but also triggers an interest towards a more accurate approach. Although no country currently includes a comprehensive estimate of business investment in intangible assets in their official accounts, most economists agree, that intangible assets, which represent an important input into the innovative process, are critical components of the modern economy (Aizcorbe, Moylan and Robbins, 2009). Understanding their role, the Bureau of Economic Analysis (BEA)5 updates its efforts to improve the measurement of the investment in intangible assets. Its main efforts have currently focused on R&D data. Nevertheless, BEA will continue to work with the National Science Foundation (NSF) in its efforts to expand the survey beyond technological innovation and R&D so as to explore the potential impact on macroeconomic aggregates of treating these other asset classes as investment. Connecting the trend towards intangible assets with that towards non R&D and non-technological data, US Advisory Committee suggests that the expansion of data collection on intangibles such as intellectual property and technology licensing activity, beyond the measurement of scientific and engineering R&D and own-account software development, will improve innovation measurement. Oslo Manual (OECD, 2005) argues that failing to protect its innovation from imitations by competitors, a firm is less willing to innovate further. In simple words, formal intellectual property provides freedom to operate (Stone, Rose, Lal and Shipp, 2008). So, protecting intellectual property is crucial for innovation itself but it remains to be examined if it is crucial also for the measurement of innovation. Patents have been considered separately to the other forms of Intellectual Property while trademarks and designs were under-reported. Australian Scorecard includes exclusively two indicators based on patents and ignores other forms. Intellectual property was firstly considered as a separate category of indicators in EIS 2005. Figure 1: EIS 2005, innovation indicators for outputs

(Source: European Trend Chart on Innovation, 2005, p.8)

5

The Bureau of Economic Analysis (BEA) promotes a better understanding of the U.S. economy by providing the most timely, relevant, and accurate economic accounts data in an objective and cost-effective manner.

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<Vlachaki Efi> In EIS 2005, the innovation indicators were assigned to five categories and grouped in two main themes: Inputs and Outputs. As it is presented by the above figure, outputs included two categories: Application and Intellectual Property. It was the first time that community trademarks and community designs have been used as innovation indicators and along with patents formed a complete category under the name Intellectual Property. Stone et al. (2008) support that intellectual capital is considered as a strategic input into innovation activities throughout the product-development pipeline that provides commercial opportunities. Intellectual property management is a significant investment in resources and represents the value of intellectual property in its innovation strategy and potential for growth, especially for smaller companies where all resources are limited. The fact that EIS refers to Intellectual Property as a whole category reveals also the increasing acceptance of trademarks and designs as innovation indicators. Livesey and Moultrie (2008) have explored the strength of trademarks and designs as national innovation indicators. According to the authors, the main argument for the use of trademarks or designs as complimentary or even alternative indicators is their distance to market. In comparison to R&D data and in particularly patent data, they are closer to the moment of the introduction of a new product to the market, giving thus more info about the commercialisation of an innovation. A weakness of both measures in terms of innovation is that they are not direct measures of technology-based innovation and they are based on other activities. However, an innovative shape, or an innovative branding exercise represent different types of innovative activity, both of which may lead to future economic growth.

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4 MARKETING INNOVATION MEASUREMENT: THEORETICAL ANALYSIS

4.1 Non-technological innovation measurement
As it was presented, there is a stronger focus on the non-technological aspects of innovations. Although it has been proposed by the previous section that the category non-technological reveals the absence of technological superiority excluding thus process and product innovation, there is an argument that this distinction may seem to be oversimplified and both technological and nontechnological innovation may be part of any kind of innovation. For instance, the process innovation indicators constitute the non-technological part of a technology dimension (Fructuoso, 2009). Even if we can accept that non-technological innovation may include characteristics of technological ones and vice versa, we should recognise that such a distinction helps us understand new forms of innovation that differ from the traditional ones. An interesting paper about the significance of non-technological innovation is that of Schmidt and Rammer (2007) who compare non-technological innovations (organisational and marketing) with technological ones. According to their findings, using German CIS4 data, in manufacturing 60% of all firms introduced technological innovations and also 60% of all firms introduced nontechnological innovations. For knowledge intensive services the corresponding figures are 52% and 66%, and for other services 37% and 48%. These figures reveal clearly that service industries are more focused on non-technological innovations rather than on product and process innovations. This is confirmed also in the paper of Arundel, Kanerva, Cruysen and Hollanders (2007) for 25 EU member states. More specifically, a lower percentage of all service sector firms (34.0%) than all manufacturing firms (39.3%) are technical innovators (introducing product or process innovation) (Arundel et al., 2007). According to CIS4 data, there are no differences in the percentage of all industrial and service sector firms that introduced an organizational and/or marketing innovation. Nevertheless, for innovative firms only, a higher percentage of service firms introduce each type of non-technological innovation, with the difference greatest for organizational innovations. Table 11: Enterprises with innovation activities that introduced a non-technical innovation
organisational or marketing innovation industry* services 63.5% 71.3% organisational innovation 55.3% 64.9% marketing innovation 32% 35.6%

* industry firms include Mining & quarrying (C),Manufacturing (D), and Utilities (E). Data available for EU27 less Latvia, Finland, Slovenia, Sweden and the United Kingdom. (Source: Eurostat, as cited in Arundel, Kanerva, Cruysen and Hollanders, 2007, p. 10)

The differences in the service sector industries indicate that the innovation activities of service industries are more focused on marketing and organisational innovations than on product and process innovations. So, before we proceed with the analysis of marketing innovation, it would be useful to refer to a paper that deals with the service innovation measurement.

4.1.1 Service Innovation Measurement

Product innovations in services can include significant improvements in how they are provided (for example, in terms of their efficiency or speed), the addition of new functions or characteristics to existing services, or the introduction of entirely new services (OECD, 2005). Examples of service innovation are significant improvements in internet banking services, such as greatly improved <MBIT, 2009-10> page 21

<Vlachaki Efi> speed and ease of use, or the addition of home pick-up and drop-off services that improve customer access for rental cars. According to Kanerva, Hollanders and Arundel (2006), the available indicators are not adequate to measure service sector innovation, primarily because they concentrate too heavily on technical innovation and ignore non-technical innovation. The report of Arundel, Kanerva, Cruysen and Hollanders (2007) provides indicators for innovation in the business services sector of the European Union. Table 12 summarises a list of innovation indicators, suitable for service sector firms: Table 12: Service sector innovation indicators
1 HUMAN RESOURCES 1.1 Share of firms engaged in training for innovation purposes 1.2 Share of firms reporting lack of qualified personnel as an important issue reversed indicator 2 INNOVATION DEMAND 2.1 Share of firms reporting uncertain demand as an important issue reversed indicator 2.2 Share of firms reporting no need to innovate because no demand for innovation reversed indicator 3 PUBLIC SUPPORT FOR INNOVATION 3.1 Share of firms that received any public funding for innovations 4 PRODUCT AND PROCESS INNOVATION 4.1 Share of firms engaged in intramural R&D 4.2 Expenditures in intramural R&D (% of total innovation expenditure) 4.3 Share of firms engaged in acquisition of machinery etc. 5 PRODUCT AND PROCESS OUTPUTS 5.1 Share of firms with highly important effects in reduced materials and energy 5.2 Share of firms with highly important effects in improved flexibility 5.3 Share of firms with highly important effects in improved quality 5.4 Share of firms with highly important effects in reduced labour costs 6 NON TECHNOLOGICAL INNOVATION 6.1 Share of firms with highly important effects in reduced time to respond 6.2 Share of firms with highly important effects in improved quality 6.3 Share of firms with highly important effects in reduced costs 7 COMMERCIALISATION 7.1 Turnover of new and significantly improved products only new to firm (% of total turnover) 7.2 Share of firms that have new or significantly improved products new to market 8 INTELLECTUAL PROPERTY 8.1 Share of firms that applied for a patent 8.2 Share of firms that registered an industrial design 8.3 Share of firms that registered a trademark (Source: Arundel, Kanerva, Cruysen and Hollanders, 2007, p. 28)

The use of Intellectual Property in service sectors is a main topic of the above report. Based on CIS4, Arundel et al. (2007) conclude that twice as many industrial than service firms applied for a patent and more industrial than service firms applied for a trademark. The percentage of service and industrial firms that registered an industrial design is similar and service sector firms are slightly more likely than industrial firms to claim copyright. Table 13: Percent of innovative firms that applied for a patent, registered a design or trademark, or claimed copyright between 2002 and 2004
patents industry services 20,1% 8,3% designs 18,7% 16,3% trademarks 18,4% 9,8% copyright 5,3% 5,9%

(Source: Eurostat, as cited in Arundel, Kanerva, Cruysen and Hollanders, 2007, p. 11)

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<Vlachaki Efi> Apart from copyright, industrial firms prove to be heavier users of IP than service sector firms. This gap between the two sectors may be based on the lack of information or experience with using IP mostly for trademarks- but it may be based on fewer eligible inventions, designs and brands that can be protected as IP in service sector firms mostly for patents and designs. Samuelson (2009) supports that innovation in service sectors was much less protected than in manufacturing sectors. Services have been traditionally unpatentable because they were perceived to be non-technological. Trademarks are important for services not only because of the lack of a patent protection but also because of their nature. Due to the fact that services are intangible and the consumer cannot always try the service before buying it, the decision process becomes more complex. So, trademarks can play the role of a quality guarantee (Millot 2009). Along with the importance of IP in the above scoreboard, there is a clear focus also on the nontechnological aspect of innovation. The sixth category deals with the parameters of a organisational innovation while the seventh indicator identifies the correct meaning of innovation which is a commercialised invention. The use of such a category is very important since no matter the level of technological progress comprised in an invention, it will have no economic impact if it is not commercialised on the market. Commercialisation can be similar to the Outputs category of EIS 2009. In comparison to EIS, the proposal for service sector includes a new category: Innovation Demand. This category consists of two indicators: Share of firms reporting uncertain demand as an important issue and Share of firms reporting no need to innovate because no demand for innovation. These indicators have been characterised as reversed because an increase in the value of the original indicator is correlated with a reduction in performance. So, there is a clear focus also on why innovation has happened. Although the analysis of service innovation measurement constitutes a main reference for the analysis of marketing innovation measurement we should distinguish these two terms. According to Oslo Manual, this distinction may depend on the nature of the firms business. An example is an innovation involving internet sales. For a firm that produces and sells goods, the introduction of ecommerce for the first time is a marketing innovation in product placement. Firms that are in the business of e-commerce (e.g. auction firms, Web site providers that allow other firms to advertise or sell their products, firms arranging the sale of travel tickets, etc.) are offering sales services. For these firms, a significant change in the characteristics or capabilities of their Web site is a product (service) innovation. Some innovations are both product and marketing innovations. For example, if a firm implements a new sales and customer service operation, introducing both a new way of marketing its products (direct selling) while also offering additional services (e.g. repair) and product information to customers. So, the measurement of marketing innovation demands a separate analysis. In the following paragraphs, we are going to examine the adaptability of some innovation indicators to marketing innovation measurement. Before we proceed, though, with the analysis of potential indicators, it would be useful to define the dimensions of marketing innovation.

4.2 Marketing innovation dimensions

Hollanders and Cruysen (2008) proposed a revision of the innovation dimensions for the EIS 20082010 both for technological and non-technological innovations. As the authors suggest, the EIS 2005-2007 uses five innovation dimensions, three of which reflect innovation inputs (innovation drivers, knowledge creation and innovation and entrepreneurship) and two of which reflect innovation outputs (applications and intellectual property). These five dimensions, however, could not cover properly non-technological or non-R&D innovation such as marketing innovation. <MBIT, 2009-10> page 23

<Vlachaki Efi> According to the proposed model for the innovation process and its dimensions, marketing innovation could be described by four categories of dimensions: i. human resources, ii. entrepreneurship and the availability of finance, iii. throughputs and iv. applications (Hollanders and Cruysen, 2008). Figure 2: Innovation process - dimensions

(Source: Hollanders and Cruysen, 2008, p. 9)

Human resources reflect the availability of high-skilled and educated people. Along with entrepreneurship and finance they can be considered as the main innovation drivers (inputs). Applications reflect the results of innovative activities (outputs) and come closest to capturing innovation performance. Apart from inputs and outputs that include the creation of new knowledge, the model incorporates the diffusion of this knowledge. In the new model of Hollanders and Cruysen a new category has been emerged: throughputs. Throughput indicators measure knowledge diffusion, including collaboration between firms and several actors (suppliers, clients and competitors), purchase of knowledge, and new organizational arrangements. This category covers both technological and non-technological innovations. To complete the presentation of this model, the authors suggest that we should take into account where innovation takes place including the socio-economic environment and the sectoral structure (Hollanders and Cruysen, 2008). Applying this systemic approach especially for marketing innovation, we should refer to three main categories of indicators: inputs, throughputs and outputs.

4.2.1 Inputs
In general, there is an agreement among innovation theorists that firms tend to be more innovative, if their resources are higher. Nevertheless, as marketing innovation is new for the innovation literature, it would be useful to search for sources that give specific information for the relationship of marketing innovation with firm resources. Schmidt and Rammer (2006) have tried to analyse the determinants of non-technological innovations and compare them with those of technological innovations. Analysing marketing and organisational innovation activities of German firms during the three-year period 2002 to 2004, they conclude that the determinants of technological and non-technological innovations are quite similar especially in the case of the resources. Firms tend to innovate in every form if their tangible and <MBIT, 2009-10> page 24

<Vlachaki Efi> intangible assets such as human capital and financial resources are high. Commonalities between the factors of technological and non-technological innovations are found also for the size of the company, the export status and the share of highly qualified labour. All three factors influence a firms decision to introduce innovations of both types positively. The share of high skilled labour has a higher coefficient in the equation for technological innovations than non-technological innovations. Schuberts conclusions mostly agree with the above findings adding a special condition for the case of pure marketing innovations. According to the results of the study upon the German CIS7 that Schubert (2009) has conducted, higher resources increase the probability of technological innovations but decrease the probability for a firm to engage only in non-technological innovations. In other words, higher resources help firms to increase the scope of their innovation activities and become innovator in each of the four types of innovation while reduce the probability of being a pure marketing or organisational innovator. Moreover, market is considered to be a significant factor that influences the innovation strategy of a firm. According to Schmidt and Rammer (2007) the most important factor that influences firms innovation behaviour proved to be the competitive environment. Fast changing technologies and short product life cycles are parameters that increase significantly the likelihood that a firm introduces both technological and non-technological innovations. While, organisational innovation is not significantly affected by the degree of diversification of the products/services, less diversified firms are less likely to introduce marketing innovations. Firms are less likely to introduce technological and marketing innovations if they are less diversified and thus they are less possible to need further improvements to their already optimal processes. One of the few differences between the determinants of technological and non-technological innovation arises for the number of main competitors. The likelihood to introduce non-technological innovations itself is not influenced by the number of main competitors. (Schmidt and Rammer, 2007). According to Schubert (2009), firms with an intermediate market share are much more likely to have a broad innovation strategy consisting of both marketing and product/process innovations. A particularly weak or particularly dominant position on the market tends to become pure marketing or organisational innovators. To sum up these two studies, the increase of the resources (human, capital, information, etc) of a firm increases the probability of a marketing innovation as of any type of innovation. A main source of information about the above determinants is Eurostat. Some examples of indicators that we could find on country level that may be related to marketing innovation are: tertiary education in business and administration, education and training activities in social sciences, business and law, participation of employed persons in social sciences, business and law, public R&D expenditures, (http://epp.eurostat.ec.europa.eu/portal/page/portal/education/data/database). Community Innovation Survey provides some info on firm level such as questions about public financial support. Unfortunately harmonised CIS 4 questionnaire lacks questions that refer to the market situation of a firm, the number of main competitors and their relative size, the relevance of various competitive factors such as price and quality. In contrast with the harmonised questionnaire, German CIS 4 contains a number of questions about: the market situation of a firm, containing questions on the number of main competitors and their the relative size, on the relevance of various competitive factors (such as price, product quality, technology, service, advertising etc.), on the significance of different market environments (such as high rate of market entries, rapid technological change, short product cycles, high uncertainty) (as cited in Schmidt & Rammer, 2007, p.7). So, we may expect also harmonised questionnaire to take into account the input referred to the market forces.

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4.2.2 Throughputs
One of the main conclusions of the previous section is that Intellectual Property should be considered as a valuable innovation indicator. Hollanders and Cruysen (2008) suggest the EIS 2007 intellectual property dimension could be included in throughputs dimension, including patents resulting from technological innovation and trademarks and industrial designs also resulting from non-technological and services innovation. Before we proceed with the analysis of the use of Intellectual Property for marketing innovation it would be useful to define and in short what Intellectual is and contains (ANNEX I presents a thorough analysis in Intellectual Property). Intellectual property management is a significant investment in resources and represents the value of intellectual property in its innovation strategy and potential for growth, especially for smaller companies where all resources are limited. The term Intellectual property (IP) refers to creations of the mind: inventions, literary and artistic works, and symbols, names, images, and designs used in commerce. According to World Intellectual Property Organization (WIPO), intellectual property is divided into two main categories: i. industrial property that includes inventions (patents), trademarks, industrial designs, and geographic indications of source and ii. copyright that includes literary and artistic works such as novels, poems and plays, films, musical works, artistic works such as drawings, paintings, photographs and sculptures, and architectural designs (www.wipo.org/about). Non-technological innovations are usually not patented and therefore indicators based on patents or R&D expenses are not applicable for their measurement. According to Millot (2009), trademarks are part of firms marketing strategy and as such they could bring information on marketing innovation. Trademark law aims mainly at preventing consumer confusion. A trademark enables the consumers to indentify the product that best meets their needs without be misleading by other manufacturers of inferior quality. So, the registration of a new trademark requires the novelty of the sign itself, which must not be similar to any already registered trademark. Nevertheless, such a registration does not require the novelty of the product, which means that a registered trademark does not assure any innovativeness. However, there are many arguments that suggest that a trademark may be related to innovation and vice versa. In the case of the launch of an innovation, a registered brand name can be considered a valuable asset since a company can safely invest in the brand. On the other hand, a successful branding strategy may reinforce the perception of the innovation by consumers and eventually may set the brand name as the reference of the relative market. To sum up, branding is an essential part of the marketing of an innovation. Contrary to patents, trademarks do not refer to inventions but to innovations. This implies the embodiment of a creative idea in a marketable form. According to Millot (2009), trademarks are less focused on the technological side and more on the commercial aspect. Besides, trademarks could make it possible to appraise some kinds of innovations that are not reflected by patents and R&D data, especially the According to the above paragraphs, trademarks apply better to non-technological innovations rather than patents. Nevertheless, this does not suggest that the application for a trademark excludes the possibility for a patent application and vice versa. Malmberg (2005) suggests that trademarks may also be used to extend protection after the expiration of a patent. For instance, they are especially important in the pharmaceutical industry since trademarks may help a company to keep its market power also after the expiration of the patent.

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<Vlachaki Efi> 4.2.2.1 Trademarks and Marketing Innovation Mendonca, Pereira and Godinho (2004) have suggested, as a creation of the mind, a trademark does not reveal technological inventiveness but rather marketing creativity. As it was mentioned in the introductory part for the intellectual property, a registered trademark must be distinctive so that consumers can distinguish it as identifying a particular product, as well as from other trademarks identifying other products. In other terms, a trademark should own a unique position in consumers mind. This, however, does not require any technological superiority but an effective and unique brand strategy and marketing strategy overall. There is a clear link between branding and trademark but before we analyse this relationship it is useful to distinguish these two terms as a brand may not be registered as a trademark. So, brand strategy includes two key questions: if there is any need to create a brand and if there is any need to protect this brand. To brand or not to brand Naming is a key element of positioning process. Companies are facilitated to describe to the consumer the major benefit of the product and consumers are facilitated to distinguish the product in a confusing and crowded market. A product of high brand equity creates loyal customers and allows a company to keep high margins. Nevertheless, there are some cases provided by Ries and Trout (2000) in which the expected value of a potential brand name is not promising enough to bare the cost or the risk of naming a product. Some criteria that help the decision of naming a product are: expected volume, competition, advertising support, significance and distribution. To protect or not to protect Similar to the concept of brand equity, a trademark possesses a value that may be further exploited by expanding the brand to new products or through licensing. According to Economides (1987), the value of a trademark is based on the information asymmetry that is observed in a market place. Information asymmetry refers to the lack of information awareness that characterises one party to a transaction. In simple words, the seller possesses better information as to the unobservable features of a commodity for sale than the buyer. The economic role of the trademark is to help the consumer identify the unobservable features of the trademarked product. This role is identified with regard to purchase frequency of a product. For experience goods, the degree of a trademark's success is a function of: the consumer's ability to recall the mark and its associated features, the inability of others to use a confusingly similar mark and the reluctance of firms to change the variety and quality features of the trademarked product.

In this product category, a key success factor is the ease that a consumer associates a trademark with a review that comes from his/her previous experience. A good memory for the consumer, a well identifiable trademark, constancy in the features of the product affects this mechanism in a positive way (Economides, 1987). For search goods, trade names may indirectly signal a quality standard extending to multiple products within a category. In this case, the consumer is possible to be unable to base his/her purchasing decision on a previous experience. As a result, consumers may rely their decision on the previous experience of people they trust or on information that comes from media. The information, though, that comes from these sources may be considered insufficient for the purchasing decision. Trademarks, here, are used not to help the consumer recall the quality that he/she has already experienced. They are used to help the consumer assess the quality level of a product that he/she has never used. For instance, even though a consumer is an infrequent buyer of a particular kind of electronic product, he/she may be a frequent buyer of the overall category of electronic products, <MBIT, 2009-10> page 27

<Vlachaki Efi> and thus he/she is likely to have previous experience in the consumption of goods with the same trade name. Choosing a high quality standard in the category of electronic products, a manufacturer can use the trade name to transmit formation on quality through the direct previous experience of consumers (Economides 1987). On the other hand, trademarks have been criticised that they create monopolies and distortions. Trademarking can be considered a requirement for advertising of perceived images since there is a protection against any competitor who aims at imitating the product and profiting from its advertising. Nevertheless, instead of limiting competition, trademarks allow firms to compete in one more dimension. According to Malmberg (2005), this mental tie is possible to result in suboptimal number of brands and loss of scale economies. Moreover, when companies are able to pre-commit their advertising expenditures before prices and quantities, they succeed to become a monopolist. This market power, though, results in the entry of more than the optimal number of firms and the underproduction of each brand. A third kind of distortion can occur if perception advertising is in reality persuasive, and thus distorts decisions by changing the minds of the consumers regarding the desirability of the product. These distortions, however, are more than offset by the efficiencies arising from a trademark's ability to distinguish between goods with unobservable variances in quality and variety features. Most of the value is created by the association of trademark with the product (Economides, 1987; Malmberg, 2005). To decide if trademarking will be beneficial for a company or not, one should estimate the expected value of a trademark and compare it to the cost of its application. According to Malmberg (2005), for the trademark holder, a trademark equals to an abstract value that may be further exploited by expanding the brand to new products or through licensing. This value is often referred to as brand equity. In practical terms, the value of a trademark equals to the probability of being accepted times the revenue associated with the brand while the cost of it is equal to the present value of the fees needed to maintain the mark (Mendonca et al., 2004). As it was mentioned before, a marketing innovation refers to a significant change in the marketing mix with the aim at increasing the target market or the sales. In the case that a company believes that this change is significant enough to influence the consumers perception of the delivered quality, trademarking is applicable. A trademark may protect various aspect of the marketing mix. Trademarked innovations for product There are trademarks that protect significant changes in the design of an existing product. As already mentioned, of course, a trademarked marketing innovation in product packaging and design demands that the functional or user characteristics of the product are not significantly changed. On January 8, 2008 the US Patent and Trademark Office granted Apple Inc. a trademark for the threedimensional shape of its iPod media player. According to Oronzco and Conley (2008), this was more than the protection of an innovative product design. It gives Apple a new weapon in the fiercely competitive market for media players. As utility patents expire, Apple will be able to prevent its competitors from imitating the circular-touchpad interface and risking a potential litigation. Colour may well used as a sign to identify the goods/ services of one undertaking and distinguish those goods/ services from others. In November 1995, Kraft managed to protect the violet colour for chocolates (INTA, 1996). Requirements concerning the representation of a colour mark may include a specification to the effect that the trademark is a colour mark, a written description of the mark and reproductions of the mark in colour. Some trademark offices require the relevant code from an internationally recognised colour system such as PANTONE, RAL, Focoltone.

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<Vlachaki Efi> Non-traditional trademark may expand to smell, taste, sound and feel. Nevertheless, only a few smell (or scent, olfactory) have achieved registration. The UK's first olfactory trademark was granted to Japan's Sumitomo Rubber Co in 1996 for a floral fragrance of roses as applied to tyres. More recently, however, the European courts rejected the smell of ripe strawberries on the ground that there is no generally accepted international classification of smells. The chemical formula for a smell is problematic as it is deemed to represent the substance rather than the smell of that substance. Until a sufficient method is devised (such as Pantone for colours), this case seems to suspend the wide acceptance of smell marks (Butler, 2008). In the US, The Trademark Trial Appeal Board (TTAB)6 decided that the non-functional scents are eligible for federal trademark registration in the matter of Celia Clarke. The applicant, Celia Clarke, manufactured sewing thread and embroidery yarn, applied for a mark, described as "a high impact, fresh, floral fragrance reminiscent of Plumeria blossoms. The Examining Attorney rejected the application on the ground that since the mark did not distinguish Clarke's goods from other competitors, did not function as a trademark. Clarke appealed to the TTAB, and the TTAB in a landmark decision, held that there was no reason that a scent could not identify and distinguish certain types of products. Thus, the Board allowed registration of an arbitrary, non-functional scent. There has been few registration of scent marks following the decision of Clarkes case such as the application for a lemon fragrance of a manufacturer of digital laser printers, photocopies etc. (Bhagwan, Kulkarni and Padmanabha, 2007). The United States Patent and Trademark Office (USPTO) has recently granted the mark its first extension and registered the cherry scent for synthetic lubricants for high performance racing and recreational vehicles. Unlike smells, sounds can be represented making their recognition as trademarks easier. n recently defined areas of convergence concerning the representation and description of non-traditional marks, the WIPO Standing Committee on the Law of Trademarks, Industrial Designs and Geographical Indications (SCT) agreed that Offices may require that the representation of sound marks consist of a musical notation on a stave, a description of the sound constituting the mark, or an analogue or digital recording of that sound or of any combination. Where electronic filing is available, an electronic file may be attached to the application. However, for some jurisdictions, only a musical notation on a stave may be considered to adequately represent the mark. (WIPO, 2008). In the United Kingdom, the sound of a barking dog for paints and varnishes has been registered by ICI. Deutsche Telekom has also registered its jingle as a sound mark under the Madrid Protocol. The registrability of taste as trademark can be considered similar to smell mark. Taste marks may only be applied to goods and not to services. OHIM rejected the pharmaceutical company Eli Lillys attempt to register the taste of artificial strawberries based its decision on the fact that this specific flavour aims at making the product more pleasant and at distinguishing it from others. A similar attempt by N.V. Organon to register an orange flavor for pharmaceuticals was rejected by the USPTO. As the Trademark Trials and Appeals Court pointed out, it is difficult to define how taste can act as a trademark when consumers only taste goods after purchase (WIPO, 2009). A feel (or texture) mark is required when the surface of the product might lead to recognition, for instance because the surface touched has a specific recognisable structure or texture. At least in one jurisdiction, it was possible to register a texture mark. The graphic representation of the sign was achieved in embossed printing (Braille). In one Member State, a mark has been registered for the texture or surface of a bottle60. The applicant indicated the type of mark in the application and provided a very detailed description of the mark and a Braille-like sample of the surface, as reproduction of the sign (WIPO 2006).
The Trademark Trial and Appeal Board (or "TTAB") is a body within the United States Patent and Trademark Office (USPTO) responsible for hearing and deciding certain kinds of cases involving trademarks.
6

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<Vlachaki Efi> Trademarked innovations for price In cases that pricing is the main element on which firms can differentiate, a company may need the protection of a trademark. The "Name-Your-Own-Price" (NYOP) is a pricing system in which a buyer specifies a price and a product and/or service, and asks sellers to match that combination. It is widely known that Priceline.com first gained prominence for its Name Your Own Price system, where travelers would name their price for airline tickets, hotel rooms, car rentals, and vacation packages. In 2000, Pannell-Christ Inc., a provider of consulting and training services, sued Priceline.com that provides "name your own price" services for groceries and airline tickets. According to the lawsuit filed in federal court, Pannell-Christ is disputing Priceline's use of the phrases "Name Your Price" and "Name Your Own Price." Pannell-Christ maintains it used the "Name Your Price!" trademark as far back as five years ago. However, the company had not filed for a trademark on the phrase until several months after priceline.com had begun using the slogan in 1998. The U.S. Trademark Office granted Pannell-Christ federal registration of the mark on February 1, 2000. Maureen Dorney, an attorney and expert on intellectual property and trademark disputes for Gray, Cary, Ware & Freidenrich, said the "Name Your Price" slogan at the center of the storm may not be considered a phrase that may not be trademarked, such as "aspirin," or "escalator," both of which are now used as generic terms for the objects they represent (Boulton, 2000). Trademarked innovations for place According to the Oslo Manual, new marketing methods in product placement primarily involve the introduction of new sales channels. PhoneBank is a registered trademark of Lloyds TSB Bank for its 24/7 Telephone Banking service. Tesco entered first in online grocery shopping after registering for tesco.com. Trademarked innovations for promotion New marketing methods in product promotion involve the use of new concepts for promoting a firms goods and services. OECD does not recognise that trademarking is applicable to the promotion part. Nevertheless, there is a very famous trademark used to support a tourism campaign. The rebus that consists of the capital letter I and a red heart symbol, is a quite recognizable trademark that characterises for decades a campaign to promote tourism in New York State. Many other places and companies have tried to use the simple yet effective logo. Many of those have paid licensing fees to New York State in exchange for the right to use the logo. However, endless numbers of those using it have not paid such fees, resulting in trademark objections from the states lawyers. Another example is Bookit!. Bookit! is also a registered trademark for a campaign, sponsored by Pizza Hut, that aims at motivating people to read by rewarding their reading accomplishments with praise, recognition, and fun. 4.2.2.2 Trademarks as Marketing Innovation Indicator Indicators are means to quantify and simplify certain aspects of a phenomenon. As it was presented in the analysis of several innovation metrics there are no perfect or complete indicators of innovation as there are no perfect indicators of other socio-economic phenomena. Indicators capture partially some aspects of the variable that they are used to measure. It is important, therefore, to be aware of the benefits and limitations of an indicator such as trademarks. There is an international and diachronic record of trademarks that helps the researchers to have a reliable statistical indicator for a wide range of countries. Moreover, the similarity of trademark law from country to country and the existence of international systems of trademarks such as the Madrid System enable the international comparisons. As it will be presented in following section, a significant part of these data are accessible though a few electronic databases such as WIPO and CTM databases. Apart from the geographical variables, trademark statistics offer sufficient information across different sizes of firm. More specifically, the fact that the fees for trademarks <MBIT, 2009-10> page 30

<Vlachaki Efi> are generally lower than for patents facilitates small and medium sized firms (SMEs) to apply for a trademark. The assessment of trademark is often based on its comparison to another quite known indicator, patent. One particular drawback of patents and R&D data is that they do not reflect the commercial aspect of innovations. Patents and R&D data are indicators of invention rather than indicators of innovation. According to Millot (2009), a patent may indicate the prior art; nevertheless it does not indicate the commercial value of an invention. No matter the level of technological progress comprised in an invention, though, it will have no economic impact if it is not commercialised on the market. Contrary these indicators, trademarks are obviously linked to the commercialisation of products, as they are fundamentally used to sell products or services on the market. Trademarks make it possible to describe some kinds of innovations that are not reflected by patents and R&D data, especially the non-technological innovations such as service innovation. Industrial companies seem to be more likely to apply both for patents and trademarks. Nevertheless, service companies seem to be more likely to apply for trademarks rather than patents. So, trademarks could provide us with information about a wide set of business firms both for the services and the manufacturing industry. Also within these two basic categories, trademarks facilitate a cross-sectoral analysis based on Nice Agreement. The Nice Classification of Goods and Services was an Agreement concluded on June 15, 1957, at Nice Diplomatic Conference and it is based on on a multilateral treaty administered by the World Intellectual Property Organization (WIPO). The Nice Classification is a system of classifying goods and services for the purpose of registering trademarks. The latest 9th version of the system groups products into 34 classes of manufactured goods and 11 classes of services. On the other hand, trademarks possess also some limitations. Although Nice Classification offers the potential of comparing 45 product and service classes to each other, these classes are much too aggregate. For example, Class 5 covers the product categories of pharmaceutical, medical and veterinary preparations, mixed with dental wax, disinfectants, fungicides, herbicides, and even food for babies. Moreover, Nice classes do not have a direct connection sectoral nomenclatures such as the NACE (Statistical Classification of Economic Activities in the European Community) (Mendonca et al., 2004). Another restriction of trademarks use is that the relationship between new products and new trademarks is not one-to-one. A trademark can be used in more than one product classes. For instance, the trademark of Yamaha has been used for quite different product categories such as musical instruments and motorcycles. In this case, one trademark corresponds at least in the product class 12 (vehicles; apparatus for locomotion by land, air or water) and in the product class 15 (musical instruments). Apart from the fact that a trademark may correspond to one or more products, a product may also correspond to one or more trademarks. Both the name and the distinctive bottle design of Coca Cola have been trademarked protected though one brand. A problem that can be considered also for inventions is the high number of brands that are used but they are not trademarked. To link the above theoretical analysis with exploratory researches, it would be useful to present the results of two studies that have been conducted to evaluate the use of trademarks for: innovation and industrial change (Mendonca, Pereira, Godinho), new-to-the-firm innovation (Malmberg).

Trademarks use for innovation and industrial change The study of Mendonca, Pereira, Godinho (2004) examines: i. if innovation and industrial change can be assessed through trademark-based indicators and ii. if significant differences and evolution <MBIT, 2009-10> page 31

<Vlachaki Efi> in performance can be identified. To answer these two questions, the authors base their arguments on both quantitative and qualitative data that have come from a study of CTMs and a recent research on national trademarks of Portuguese firms. Evidence from the Portuguese case suggests that companies that tend to use one kind of IPR tend to use other IPRs. High and medium high-technology industries tend to have an integrated strategy regarding both patents and trademarks. In the case of services, evidence from a survey in Portugal shows that industries usually classified as intensive users of information are those that use more trademarks. So, the authors suggest that there is a relationship between the use of trademarks and the intensive use of technology and information and knowledge in a sector. A number of variables such as the existence of an autonomous marketing department revealed a statistically significant degree of association with the importance attributed to trademarks and their use in the past. Moreover, the increase of service marks applications reveals on the one hand a gradual fall of the proportional importance of the tangible goods and on the other hand an increase in the service products. So, trademark can be also a sign of structural and sectoral changes. Combined with the increasing availability of electronic data, according to the paper these results indicate an interesting opportunity for using trademarks as a partial output indicator of new products introduced in the market and, therefore, can be used as an empirical yardstick for measuring overall change in the patterns of economic activity. Trademarks use for new-to-the-firm innovation The study of Claes Malmberg (2005) is an initial and exploratory investigation at the detailed firm level of trademark statistics as an indicator of new-to-the-firm innovations, i.e. new products (both consumer and intermediate goods). The study is based on a comparison of trademarks and the launch of new-to-the-firm products for a number of Swedish companies in engineering (electromechanical and automotive sectors) and pharmaceutical industries. The comparison between firms registrations of trademarks and their new-to-the-firm innovations in engineering industries has not been very encouraging so far, at least not for the period studied (1945-1960). The considerable inconsistencies in the use of trademarks within the companies distort the trademark counts and it is difficult to claim that they reflect the introduction of new innovative products with accuracy. A key issue is the use of model numbers that are not usually registered as trademarks. Although there are scattered signs of an increased registration of model numbers as trademarks in more recent times, this is still far from being a general pattern. The negative conclusion regarding the use of trademark in these companies must therefore be considered valid also today. The results for the pharmaceutical industry are very different. The trademark count in class 5 (pharmaceuticals and other preparations for medical purposes) is co-integrated with the number of new drugs with high significance and is following it well in the long term. This indicates that trademarks, it at least in the long term, are reflecting new-to-the firm innovations. The deviations in the short-term may partly be influenced by different times to approval for different drugs which make the flow of products from the firm into the approval process to look different than the flow of approvals. To sum up, the authors suggest that trademark statistics may be well suited as innovation indicator for frequently trademarking industries such as pharmaceutical with a less uncertain development process than in pharmaceutics. Nevertheless, the negative results for the electromechanical and automotive companies suggest that the use of trademarks as innovation indicator has to be made selectively, probably on a per industry basis.

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<Vlachaki Efi> Sources of trademark data and proposed indicators Thanks to the registration systems, trademark datasets are available with information on the owner, its geographical origin, and the dates of application and registration. There are four main sources that offer databases about trademarks: World Intellectual Property Organization (WIPO). It offers statistics based on information supplied to WIPO by IP offices in annual surveys and supplemented with data found in national offices annual and statistical reports. Trademark applications are analysed by: residents and non-residents, office, origin, class (www.wipo.int/ipstats/en/statistics/marks/index.html). The Office of Harmonization for the Internal Market (OHIM). CTM-ONLINE provides access to information on community trademark applications and registrations. Each CTM file generally contains all correspondence between OHIM and the CTM owner and/or its representative in relation to that CTM application or registration. The information provided is taken from the internal systems used by the OHIM to process trademark applications and registrations. There are available data about the number of applications, published trademarks, registered trademarks, renewals, oppositions received, cancellations, withdrawals per country, NICE class and type of mark. (oami.europa.eu/ows/rw/pages/OHIM/statistics.en.do). The Benelux Office for Intellectual Property (BOIP). The Benelux Office for Intellectual Property (BOIP) is the official Benelux organisation for the registration of trademarks and designs. There are available data about the number of Benelux filings (by NICE class, national offices and country), online submissions, collective trademarks, publications, renewals, registrations and refusals. (www.boip.int/en/generalPublicationsAnnualReports.html). The United States Patent and Trademark Office (USPTO) is the Federal agency for granting US patents and registering trademarks. Through Trademark Electronic Search System (TESS), online searching of existing trademark application and registration information is available. The reports present data about: registrations, applications, publications, renewals and contested trademark cases. (http://www.uspto.gov/web/offices/ac/ido/oeip/taf/ann_rpt_intermed.htm). CIS gives us information about the number of registrations for innovative and non-innovative firms. More data about CIS database will be analysed in the following sections.

4.2.2.3 Other Throughputs Apart from registering a trademark, some other firm activities may produce important throughputs for marketing innovation. As mentioned before, throughput indicators measure knowledge diffusion, including collaboration between firms and several actors (suppliers, clients and competitors), purchase of knowledge, and new organizational arrangements.

4.2.3 Outputs
According to the new EIS 2008-2010 methodology, outputs include two dimensions: Innovators and Economic effects. Innovators captures the success of innovation by the number of firms that have introduced innovations onto the market or within their organisations. It covers both technological and non-technological innovations. Economic effects captures the economic success of innovation in employment, exports and sales due to innovation activities. So, EIS investigates two matters: what type of innovation has been reported (emphasis on neglected innovators, marketing and organisational ones) and what was its economic effect. Of course, a marketing innovation should possess economic effects for a company. Sales growth can be considered a typical example that it is easy to be measured. Nevertheless, marketing innovation should focus also on the consumer. So, some other effects that can be observed are: the increase of customer satisfaction or the increase of customer loyalty. <MBIT, 2009-10> page 33

<Vlachaki Efi> Eurostat is a main source that provides researchers with the above information. Some possible variables are: new-to-market sales, new-to-firm sales (% of turnover). CIS2004 is the first community survey that investigates the variable Innovators especially for marketing. The definition that is given to marketing innovation differs from that of Oslo Manual. According to CIS4 marketing innovation was defined as the implementation of new or significantly improved designs or sales methods to increase the appeal of your goods and services or to enter new markets. Based on these two aspects the relevant question was: Fructuoso (2009) based on Dutch results studies the relationship between types of innovation. In order to end up with conclusions, the author examines any correlations that might exist between ten indicators of product, process, organisational and marketing innovation. According to the results of the statistical analysis the measurement of marketing innovation is inconsistent and it does not refer to non-technological innovation. More specifically, it has been found that indicator Mar1 (New design or packaging) correlates more strongly with indicator Prod1 (New goods) than with indicator Mar2 (New or significantly changed sales or distribution methods). This implies that the two indicators do not measure consistently the dimension they refer to. Moreover, Mar1 has not been found to belong to nontechnological innovation indicators revealing that it possesses some technological content. So, Fructuoso suggests that combining New design or packaging (Mar1) and New goods (Prod1) makes more sense empirically than combining Mar1 and Mar2. This may also suggest that the distinction between a product innovation and marketing innovation should be made clearer through community questionnaire. A footnote that referred to the explanation that the Oslo Manual has proposed (significantly improved functional or user characteristics vs. a significant change in the design of an existing product) may be quite useful for a firm to choose the correct innovation. To sum up the above the analysis, table presents the proposed indicators for measuring marketing innovation. Table 14: Marketing Innovation Dimensions
DIMENSIONS 1. INPUTS 1.1 Human resources 2.1 Finance & Support 3.1 Market Forces 2. THROUGHPUTS 2.1 Intellectual property 2.2 Other innovation activities (collaboration between firms and several actors (suppliers, clients and competitors), purchase of knowledge new organizational arrangements) 3. OUTPUTS 3.1 Marketing innovators 3.2. Marketing innovation effects

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<Vlachaki Efi>

5 MARKETING INNOVATION MEASUREMENT: PRACTICAL IMPLICATIONS ON FIRM-LEVEL

5.1 Data analysis methodology
5.1.1 Source Selection
There are several sources that provide info about the above dimensions such as the database of International Trademark Register (WIPO, OHIM etc.). The selection of the fourth community survey was based on the fact that: it is the first community survey that included questions for marketing innovators, it is the last community survey that offers online access to data about marketing innovation. consistency is offered between the variables. The data of each variable refer to the same group of firms, countries and reference period. Innovation definitions, industry classification is common for every dimension enabling the comparability between them, a wide categorisation options are available. The data can be analysed by country, innovation type, size class and NACE section.

Community Innovation Survey (CIS) is a main source also for the EIS and Service Innovation Scorecard. The Community Innovation Statistics are the main data source for measuring innovation in Europe and they are produced in 27 Member States of the European Union, 3 countries of the European Free Trade Association (EFTA) and in EU candidate countries based on the Commission Regulation No 1450/2004. The data is collected on a four-yearly basis and there have been five community innovation surveys: CIS1, CIS2, CIS3, CIS4, CIS2006, CIS2008. CIS seemed to ignore marketing innovation till the version of 2004 in which two marketing innovation indicators have been added. The methodology of CIS4 includes the following directions: the target population should be the total population of enterprises related to NACE activities C to K (5.1.3 analyses further the coverage of NACE sections in CIS4), all enterprises should be included in the target population (the minimum coverage shall be all enterprises with 10 employees or more), the main statistical unit should be the enterprise, sampling frame should be the official, up-to-date, statistical business register of the country should be used while data are collected through a census, sample survey or a combination of both, the selection of the sample should be based on random sampling techniques, with known selection probabilities, applied to strata, the questionnaire should cover the main themes listed in the Oslo Manual, data collection should be based on mail surveys (internet surveying or personal interviews may also be used, as long as data quality is assured). (Eurostat, 2004).

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<Vlachaki Efi>

5.1.2 Innovation Indicators Selection

In order to select the suitable marketing innovation indicators, questions of CIS4 and the module on CIS 2008 were detected (CIS4, CIS2006 and module on CIS2008 are attached in ANEX II). A main reference for the following analysis is both the EIS2008 and the scorecard that was proposed before for Service Innovation. 5.1.2.1 Inputs indicators Two main indicators have been found in CIS4: Human Resources and Finance & Support. As mentioned, number and the degree of qualification of employees influences positively marketing innovation no matter if the firm includes one or more types of innovation in its strategy. Figure 3: CIS4, questions about the lack of qualified human resources
8.2 During the three years 2002 to 2004, how important were the following factors for hampering your innovation activities or projects or influencing a decision not to innovate? Degree of importance High Knowledge factors Lack of qualified personnel
Medium
Low
Factor not experienced

(Source: Eurostat, 2004, p.8)

Figure 4: CIS4, questions about the total number of employees

11.2 What was your enterprises total number of employees in 2002 and 2004*? 2002 2004

*Annual average. If not available, give the number of employees at the end of each year. Give figures to six digits.

(Source: Eurostat, 2004, p.9)

So, the indicators of the category Human Resources are: lack of qualified personnel (enterprises that recorded it as highly important factor for hampering innovation), total number of employees. Figure 5: CIS4, questions about public financial support
5.3 During the three years 2002 to 2004, did your enterprise receive any public financial support for innovation activities from the following levels of government? Include financial support via tax credits or deductions, grants, subsidised loans, and loan guarantees. Exclude research and other innovation activities conducted entirely for the public sector under contract. Yes Local or regional authorities Central government (including central government agencies or ministries) The European Union (EU) If yes, did your firm participate in the EUs 5th (1998-2002) or 6th (2003-2006) Framework Programme for Research and Technical Development (Source: Eurostat, 2004, p.6) No

We can detect four questions about finance and support:

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<Vlachaki Efi> Innovative activities are affected by both internal and external funding. In general, uncertainty in the success of an innovation discourages external investors from financing firms activities. Nevertheless, according to Schmidt and Rammer (2007), while this uncertainty clearly refers to the development and the implementation of new technologies, financing decision may differ for marketing and organisational innovation. The adoption of established business methods or marketing practices, supported by specialised consultants may substantially limit the risk of failure. CIS questions that could provide us with info about the financial status of a company are: Figure 6: CIS4, questions about the lack of funds 8.2 During the three years 2002 to 2004, how important were the following factors for hampering your innovation activities or projects or influencing a decision not to innovate?
Degree of importance High Lack of funds within your enterprise or group Cost factors Lack of finance from sources outside your enterprise Medium Low Factor not experienced

(Source: Eurostat, 2004, p.8)

If a firm is very profitable, creditors might be more willing to provide the firm with capital. Thus, external financing should be become easier, again making marketing and organisational innovations more likely (Schubert, 2009). Figure 7: CIS4, questions about the total turnover
11.1 What was your enterprises total turnover for 2002 and 20047? 2002 2004

(Source: Eurostat, 2004, p.9)

According to Schmidt and Rammer (2007), the variable belonging to a group influences the introduction of a marketing or organisational innovation positively. This significant effect on nontechnological forms is reasonable since effective and coordinated work flows and organisational structures are essential for the functioning of large firms and in particular large enterprise groups. Figure 8: Module of CIS2008, questions about belonging to a group
1.1 Is your enterprise part of an enterprise group? (A group consists of two or more legally defined enterprises under common ownership. Each enterprise in the group may serve different markets, as with national or
regional subsidiaries, or serve different product markets. The head office is also part of an enterprise group.)

Yes No

(Source: Eurostat, 2004, p.2)

Most of the questions are relevant to firms ability to attract funding. So, the indicators of the category Finance & Support could be: public funding of innovation (enterprises that received any public funding from local or regional authorities, central government, agencies or ministries, European Union),
For Credit institutions: Interests receivable and similar income; For Insurance services: Gross premiums written.

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<Vlachaki Efi> lack of internal/ external funds (enterprises that recorded it as highly important factor for hampering innovation), total turnover. belonging to a group.

5.1.2.2 Throughput indicators Trademarks have been analysed thoroughly in the previous section and it has been clearly concluded that it could be considered an important indicator of marketing innovation activity. CIS4 includes one question about the registered trademarks. Figure 9: CIS4, questions about registered trademarks
9.1 During the three years 2002 to 2004, did your enterprise: Yes Register a trademark (Source: Eurostat, 2004, p.8)
No

So, the proposed indicator that reflect the category Intellectual Property is: registrations of trademarks. Apart from registering a trademark, some other firm activities may produce important throughputs for marketing innovation. As mentioned before, market introduction of innovations and other preparations for the introduction of innovations -have a highly significant impact on the likelihood that a firm introduces marketing innovations. Figure 10: CIS4, questions about innovation activities
5.1 During the three years 2002 to 2004, did your enterprise engage in the following innovation activities: Yes Market introduction of Activities for the market introduction of your new or significantly innovations improved goods and services, including market research and launch
advertising Other preparations Procedures and technical preparations to implement new or significantly
improved products and processes that are not covered elsewhere. (Source: Eurostat, 2004, p.5) No

The indicators that one can use for referring to Other marketing innovation activities are: market introduction of innovations and other preparations.

CIS2004 may not refer adequately to activities especially for marketing innovation; nevertheless, the module on the marketing for CIS2008 proposes three relevant questions: Figure 11: Module of CIS2008, questions about marketing innovation linkages
2. Who developed these marketing innovations? 2.1 Mainly your enterprise or enterprise group. 2.2 Your enterprise together with other enterprises or institutions. 2.3 Mainly other enterprises or institutions . (Source: Eurostat, 2007, p.42) Select the most appropriate option only

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<Vlachaki Efi> The first question reveals the marketing innovator and more specifically it can define if a marketing innovation is internally driven, externally driven or both internally and externally driven. One could connected directly with the category linkages and entrepreneurship that is referred in EIS 2009. Possible indicators of marketing innovation activities could be: in-house marketing innovation, collaborative marketing innovation.

Module refers also to market-related activities that enable marketing innovations. As it is referred in 32nd CEIS Seminar, a new question has been developed to capture aspects of R&D-marketing integration and market analysis. The first goal reminds clearly what Levitt (1962) has suggested for a development of marketing development departments. The second goal refers to the concept of a user driven innovation (Eurostat, 2007). In user driven innovations, knowledge of customer needs constitutes a driving force in generating new ideas for product development. To be able to identify customer needs and predict where new ideas will originate newer research methods that identify customers latent needs can be used apart from the traditional methods. An example of newer techniques is ethnographic design research (Gilmore, 2002), which involves deeper research into potential customer needs through observation of their habits, routines, views and preferences. As opposed to examining average user preferences or needs, its aim is to uncover idiosyncrasies and new perspectives. Figure 12: Module of CIS2008, questions about marketing innovation activities
4. How important were the following market-related activities for your enterprises innovation projects between 2004 and 2006? High
Medium
Low
None/ Not used

4.1 Maintaining close links between your marketing department and departments or groups involved in developing or implementing your innovations 4.2 Systematic analysis of your customers needs by your marketing division 4.3 Systematic analysis of the effectiveness of your marketing techniques (Source: Eurostat, 2007, p.42)

The indicators that emerge from the above questions are: internal linkages, systematic internal customer analysis and systematic marketing effectiveness analysis.

5.1.2.3 Outputs indicators As mentioned before CIS4 is based on two aspects of marketing innovation: i. new or significantly improved designs and/or ii. sales methods to increase the appeal of your goods and services or to enter new markets. Based on these two marketing innovation the relevant question is:

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<Vlachaki Efi> Figure 13: CIS4, questions about innovations in marketing

1. During the three years 2002 to 2004, did your enterprise introduce: High

Medium

Low

None/ Not used

Marketing Innovation

Significant changes to the design or packaging of a good or service (Exclude routine/ seasonal changes such as clothing fashions) New or significantly changed sales or distribution methods, such as internet sales, franchising, direct sales or distribution licenses.

(Source: Eurostat, 2007, p.42)

So, the proposed indicator of marketing innovators is: the introduction of marketing innovation. Unfortunately CIS online database does not provide access for the two types of marketing innovation separately. For CIS 2008 the definition of marketing innovation changes following the definition that the third edition of the Oslo Manual has proposed. Marketing innovation has been considered as the implementation of a new marketing method involving significant changes in product design or packaging, product placement, product promotion or pricing and the question has changed to: Figure 14: Module of CIS2008, questions about innovations in marketing
1. During the three years 2004 to 2006, did your enterprise introduce the following marketing innovations? High



Medium



Low



None/ Not used

Design

1.1 Introduce significant changes to the design of a good or service (Exclude routine/ seasonal changes such as clothing fashions) 1.2 Introduce significant changes to the packaging of a good

Promotion

1.3 Implement a new marketing strategy to target new customer groups or market segments 1.4 Use new media or techniques to promote products, such as new advertising concepts, a new brand image or new techniques to customize promotion to individual customers or groups

Placement

1. 5 Use new sales channels, such as direct selling, internet sales, or product licensing 1. 6 Introduce new concepts for product presentation in sales outlets (e.g. sales rooms, websites, other types of outlets)

Pricing

1. 7 Use new pricing methods to market goods or services

(Source: Eurostat, 2007, p.42)

The potential indicators could be developed as above: new or significantly improved changes in product design, new or significantly improved changes in promotion, new or significantly improved changes in placement and new or significantly improved changes in pricing.

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<Vlachaki Efi> Although CIS4 refers to the effects of an organisational innovation it neglects those of marketing innovation. Fortunately, the proposed questionnaire for 2008 includes a relevant question. In this question includes five potential effects of the marketing innovation. According to the selection of the effect(s) a firm could be categorised as: sales-driven (sales increase, new-market entrance, awareness increase) or customer-driven (customer relationship marketing goals, customer satisfaction improvement). Figure 15: Module of CIS2008, questions about the effects of marketing innovations
3. How important were each of the following effects of your enterprises marketing innovations between 2004 and 2006? (If your enterprise introduced several marketing innovations, make an overall evaluation) High 3.1 Sales growth for your goods and services 3.2 Introduced products to new markets or customer groups 3.3 Increased visibility of products or business 3.4 Strengthened relationships with customers 3.5 Improved customer satisfaction (Source: Eurostat, 2007, p.42)




Medium




Low




None/ Not relevant

Following the scorecard designed for service innovation the relevant indicators reflect Marketing Innovation Effects: highly important effects in sales growth, highly important effects in introduction to new markets/groups, highly important effects in increase of products and business visibility, highly important effects in strengthening customer relationships and highly important effects in improving customer satisfaction.

Eight groups of innovations proposed by section 5.1.2 based on community surveys: five of which have been already included in CIS4 while the rest of have been proposed for the module of CIS2008. Due to lack of data availability, following statistics are based on the indicators that were referred in CIS4. Nevertheless, in order to have a complete analysis of marketing innovation indicator we include also the indicators of module on CIS2008. Some, indicators have been defined as reversed indicators. This means that the increase of their level (e.g. lack of qualified personnel) hampers any innovation activity. In table 14 all the innovation indicators has been grouped into 8 different innovation dimensions that refer to inputs, throughputs and outputs. Each innovation indicator has been presented along with the corresponding CIS code as given by Eurostat.

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<Vlachaki Efi> Table 15: Corporate Marketing Innovation Scorecard

DIMENSIONS INPUTS 1. Human resources 2. Finance & support INDICATORS 1.1 Lack of qualified personnel (reversed)1 1.2 Total number of employees 2.1 Public funding of innovation 2.2 Lack of internal funds (reversed)1 2.3 Lack of external funds (reversed)1 2.4 Total turnover 2.5 Belonging to a group 3.1 Registration of trademarks 4.1 Market introduction of innovations 4.2 Other preparations 5.1 In-house marketing innovation 5.2 Collaborative marketing innovation 6.1 Internal linkages 6.2 Systematic internal customer analysis 6.3 Systematic marketing effectiveness analysis CIS CODES HFPER_HIGH EMP02, EMP04 FUNPUB HFFUND_HIGH HFENT_HIGH TURN02, TURN04 GP_YES PROTM RMAR_YES ROTHE_YES

THROUGHPUTS 3. Intellectual property 4. Other innovation activities 5. Linkages and entrepreneurship2 6. Marketing innovation activities2

OUTPUTS 7. Marketing innovators 8. Marketing innovation effects2

7.1 Introduction of marketing innovation 8.1 Highly important effects in sales growth 8.2 Highly important effects in introduction to new markets/groups 8.3 Highly important effects in increase of products and business visibility 8.4 Highly important effects in strengthening customer relationships 8.5 Highly important effects in improving customer satisfaction 1. enterprises that recorded it as highly important factor of hampering innovation activities 2. indicators based on the module of CIS2008 for marketing innovation

MKTINNO_YES

5.1.3 Analysis Scope

Table 16 summarises the scope of the following statistical analysis. Table 16: Scope of statistical analysis
Data Source: Database: Reference period: Observation period: Geographical coverage: Sectorial coverage: Innovators types: Size class types: Units: CIS4 http://epp.eurostat.ec.europa.eu/portal/page/portal/statistics/search_database last access: 14/01/10 latest update: 24/02/08, oldest data: 2004, most recent data: 2004 the three-year period from the beginning of 2002 to the end of 2004 25 EU Member States, Iceland and Norway, Bulgaria and Romania core NACE (NACE sections C, D, E, I and J and NACE divisions 51, 72, 74.2 and 74.3), total industry (excluding construction), services (excluding public administration) technological innovative enterprises, non-technological innovative enterprises all size classes are included (between 10 and 49, between 50 and 249, 250 or more) percentage of firms

NACE is the acronym used to designate the various statistical classifications of economic activities developed since 1970 in the European Union. The use of NACE is mandatory within the European Statistical System. It provides the framework for collecting and presenting a large range of statistical data according to economic activity in the fields of economic statistics (e.g. production, <MBIT, 2009-10> page 42

<Vlachaki Efi> employment, national accounts). The main criteria applied in defining groups and divisions of NACE concern the following characteristics of the activities of production units: i. the character of the goods and services produced, ii. the uses to which the goods and services are put and iii. the inputs, the process and the technology of production. Table 17 present the NACE sections covered by CIS4. Table 17: Main NACE sections in CIS4
Code INN_TOT C_D_E C D E F G_TO_K INN_G_TO_K G H I J K INN_K Label All NACE-Core NACE (NACE sections C, D, E, I and J and NACE divisions 51, 72, 74.2 and 74.3) Total industry (excluding construction) Mining and quarrying Manufacturing Electricity, gas and water supply Construction Services (excluding public administration) Core G_to_K Services (NACE sections I, and J and NACE divisions 51, 72, 74.2 and 74.3) Wholesale and retail trade; repair of motor vehicles, motorcycles and personal and household goods Hotels and restaurants Transport, storage and communication Financial intermediation Real estate, renting and business activities K: Core coverage (NACE 72, 74.2 and 74.3)

(Source: http://epp.eurostat.ec.europa.eu/portal/page/portal/science_technology_innovation/data/database )

Apart from CORE NACE sections, total industry (excluding construction) and services (excluding public administration) are analysed (http://epp.eurostat.ec.europa.eu). According to Eurostat, enterprises with innovation activity are enterprises that introduce new or significantly improved products (goods or services) to the market or enterprises that implement new or significantly improved processes. The term covers all types of innovator, namely product innovators, process innovators, as well as enterprises with only on-going and/or abandoned innovation activities. Enterprises without innovation activity are enterprises that had no innovation activity whatsoever during the survey period (http://epp.eurostat.ec.europa.eu). The absence of innovation activity refers to product and process innovation and not to organisational and marketing changes within the enterprise. So, both types will be considered in the analysis but in order to avoid any confusion we are going to characterise the two groups as: technological innovators and non-technological innovators. In the following two sections, marketing innovation data will be presented through a geographical and sectorial analysis. In order to be able to assess marketing innovation, an indicator has been calculated for each country and NACE sector. The reference of the Index is the average of each indicator in CORE NACE. Through the online database, data of indicators are given in absolute numbers and percentages (either of the group enterprises with innovative activities or of the group non-innovative enterprises). In order, however, to able to succeed a comparability between the different records, we have chosen to work based on the given percentages. So, table 18 presents the analysed indexes:

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<Vlachaki Efi> Table 18: The indexes Index Full name

PFI IFI Public Funding Index Internal Funding Index

Calculation
Percentage of enterprises received public funding per country or sector/ core NACE average (of all countries) Percentage of enterprises that reported lack of internal funding as highly important factor of hampering innovation activities per country or sector/ core NACE average (of all countries) Percentage of enterprises that reported lack of external funding as highly important factor of hampering innovation activities per country or sector/ core NACE average (of all countries) Percentage of enterprises that belong to a group per country or sector/ core NACE average (of all countries) Percentage of enterprises that reported lack of qualified human resources as highly important factor of hampering innovation activities per country or sector/ core NACE average (of all countries) Percentage of enterprises that registered a trademark per country or sector/ core NACE average (of all countries) Percentage of enterprises that implemented market introduction activities per country or sector/ core NACE average (of all countries) Percentage of enterprises that implemented procedures and technical preparations activities per country or sector/ core NACE average (of all countries) Percentage of enterprises that implemented a marketing innovation per country or sector/ core NACE average (of all countries)

EFI

External Funding Index

BGI QHRI

Belonging to a group Index Qualified Human Resources Index Registered Trademarks Index Market-Introduction Index Other Preparations Index

TMI MKI OPI

MII

Marketing Innovator Index

As it is presented all the above indexes refer to a common denominator: the average of the percentages of each country in core NACE. Each of the above index has been calculated: per country: 25 EU Member States, Iceland and Norway, Bulgaria and Romania), per industry sector: core NACE (NACE sections C, D, E, I and J and NACE divisions 51, 72, 74.2 and 74.3), total industry (excluding construction), services (excluding public administration), per enterprise type: technological innovative enterprises and non-technological innovative enterprises.

To be able to assess easily the performance of each country according the above indexes, the involved countries have been categorized into two groups: above-average (index
1), below-average (index < 1).

5.2 Statistical analysis

5.2.1 Inputs analysis by sector
Public funding refers to: i. funding from local or regional authorities, ii. funding from central government (including central government agencies or ministries), iii. funding from the European Union (including 5th or 6th Framework Programme). Assuming that this parameter refers to <MBIT, 2009-10> page 44

<Vlachaki Efi> publicly-supported entrepreneurship, it is reasonable that data refer exclusively to firms that have introduced either a process or product innovation (technological innovators). Figure 16: CIS4, public funding per sector
1.40 1.20 1.00 0.80 0.60 0.40 0.20 0.00 C_D_E TECHNOLOGICAL INNOVATORS 1.25 G_TO_K 0.70

(Source: http://epp.eurostat.ec.europa.eu/portal/page/portal/science_technology_innovation/data/database )

As it is presented, C_D_E that refers to the total industry (excluding construction) receives a higher public funding in comparison to CORE NACE average but also in comparison to the group G_TO_K that refers to the services (excluding public administration). More specifically, the percentage of the technological innovators in total industry that received public funding is almost 77.5% higher than the corresponding percentage in services. Overall, industry (excluding construction) is above-average while services (excluding public administration) are belowaverage. Figure 17: CIS4, lack of internal funding per sector
1.40 1.20 1.00 0.80 0.60 0.40 0.20 0.00 TECHNOLOGICAL INNOVATORS C_D_E G_TO_K 1.11 0.81 NON-TECHNOLOGICAL INNOVATORS 1.20 0.78

(Source: http://epp.eurostat.ec.europa.eu/portal/page/portal/science_technology_innovation/data/database )

Higher percentage of enterprises in total industry (excluding construction) reports lack of internal funds as highly important factor of hampering innovation activities relative to the average and the corresponding percentage in services (excluding public administration). More specifically, the percentage of the technological innovators in total industry that reported lack of internal funding as a highly important factor is almost 37% higher than the corresponding percentage of services while the percentage of the non-technological innovators firms in total industry is almost 53% higher than the corresponding percentage in services. Overall, industry (excluding construction) is aboveaverage while services (excluding public administration) are below-average in both groups (technological and non-technological innovators).

<MBIT, 2009-10>

IFI

PFI

page 45

<Vlachaki Efi> Figure 18: CIS4, lack of external funding per sector
1.40 1.20 1.00 0.80 0.60 0.40 0.20 0.00 TECHNOLOGICAL INNOVATORS C_D_E G_TO_K 1.10 0.79 NON-TECHNOLOGICAL INNOVATORS 1.17 0.76

EFI

(Source: http://epp.eurostat.ec.europa.eu/portal/page/portal/science_technology_innovation/data/database )

Similarly to internal funding, higher percentage of enterprises in total industry (excluding construction) reports lack of external funds as highly important factor of hampering innovation activities relative to average and the corresponding percentage in services (excluding public administration). More specifically, the percentage of the technological innovators in total industry that received internal funding is almost 39% higher than the corresponding percentage in services while the percentage of the non-technological innovators in total industry that received internal funding is almost 54% higher than the corresponding percentage in services. Overall, industry (excluding construction) is above-average while services (excluding public administration) are below-average in both groups (technological and non-technological innovators). Figure 19: CIS4, belonging to a group per sector
1.40 1.20 1.00 0.80 0.60 BGI 0.40 0.20 0.00 TECHNOLOGICAL INNOVATORS C_D_E G_TO_K 0.99 0.90 NON-TECHNOLOGICAL INNOVATORS 0.78 1.24

(Source: http://epp.eurostat.ec.europa.eu/portal/page/portal/science_technology_innovation/data/database )

Different results appear in technological and non-technological innovators. More specifically, the percentage of the technological innovators in total industry that belong to a group is almost 27% higher than the corresponding percentage in services for the technological innovators. Contrary to these results, the percentage of services is almost 37,7% higher than that of industry in nontechnological innovators. Overall, industry (excluding construction) is bellow-average both in technological and non-technological innovators while services (excluding public administration) are below-average in technological innovators and above-average in non-technological innovators.

<MBIT, 2009-10>

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<Vlachaki Efi> Figure 20: CIS4, lack of qualified personnel per sector
1.40 1.20 1.00 QHRI 0.80 0.60 0.40 0.20 0.00 TECHNOLOGICAL INNOVATORS C_D_E G_TO_K 1.07 0.78 NON-TECHNOLOGICAL INNOVATORS 1.18 0.76

(Source: http://epp.eurostat.ec.europa.eu/portal/page/portal/science_technology_innovation/data/database )

Higher percentage of enterprises in total industry (excluding construction) reports lack of qualified personnel as highly important factor of hampering innovation activities relative to the average and the corresponding percentage in services (excluding public administration). More specifically, the percentage of the technological innovators in total industry that reported lack of internal funding as a highly important factor is almost 37% higher than the corresponding percentage of services while the percentage of the non-technological innovators firms in total industry is almost 55% higher than the corresponding percentage in services. Overall, industry (excluding construction) is aboveaverage while services (excluding public administration) are below-average in both groups (technological and non-technological innovators).

5.2.2 Inputs analysis by country

Figure 21: CIS4, public funding per industry (technological innovators)
2.00

1.50

PFI

1.00

0.50

0.00
TECH INNOVATORS

BG 0.22

EE 0.44

RO 0.49

PT 0.50

SL 0.55

PL 0.56

LT 0.57

DE 0.64

DK 0.67

CZ 0.72

MT 0.75

FR 0.92

BE 1.03

LU 1.12

ES 1.17

HU 1.23

GR 1.31

AT 1.53

FI 1.58

CY 1.60

NL 1.69

IT 1.74

NO 1.96

(Source: http://epp.eurostat.ec.europa.eu/portal/page/portal/science_technology_innovation/data/database )

Regarding public funding, countries with above-average performances are: Norway (NO), Italy (IT), Netherlands (NL), Cyprus (CY), Finland (FI), Austria (AT), Greece (GR), Hungary (HU),

<MBIT, 2009-10>

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<Vlachaki Efi> Spain (ES), Luxembourg (LU, Belgium (BE). Below-average performance is observed for: France (FR), Malta (MT), Czech Republic (CZ), Denmark (DK), Germany (DE), Lithuania (LT), Poland (PL), Slovakia (SL), Portugal (PT), Romania (RO), Estonia (EE), Bulgaria (BG). Missing values are observed for: Ireland (IE), Latvia (LV), Slovenia (SI), Sweden (SE), United Kingdom (UK), Iceland (IS). Figure 22: CIS4, lack of internal funding per country (technological innovators)
2.00

1.50

IFI

1.00

0.50

0.00

RO

LU

DE

NO

PT

FI

MT

LV

NL

BE

AT

IT

IS

DK

SE

CZ

SL

BG

IE

LT

CY

HU

EE

ES

FR

PL

SI

GR

TECH INNOVATORS 0.38 0.56 0.58 0.64 0.64 0.68 0.68 0.74 0.82 0.88 0.88 0.91 0.96 0.99 1.00 1.03 1.12 1.13 1.14 1.16 1.26 1.29 1.32 1.38 1.40 1.45 1.46 1.49

(Source: http://epp.eurostat.ec.europa.eu/portal/page/portal/science_technology_innovation/data/database )

Countries with above-average records of lack of internal funding as highly important factor for hampering innovation, in technological innovators are: Greece (GR), Slovenia (SI), Poland (PL), France (FR), Spain (ES), Estonia (EE), Hungary (HU), Cyprus (CY), Lithuania (LT), Ireland (IE), Bulgaria (BG), Slovakia (SL), Czech Republic (CZ), Sweden (SE). Below-average performance is observed for: Denmark (DK), Iceland (IS), Italy (IT), Austria (AT), Belgium (BE), Netherlands (NL), Latvia (LV), Malta (MT), Finland (FI), Portugal (PT), Norway (NO), Germany (DE), Luxembourg (LU) and Romania (RO). Missing values are observed for: United Kingdom (UK). Figure 23: CIS4, lack of internal funding per country (non-technological innovators)
2.50 2.00 1.50 IFI 1.00 0.50 0.00

MT

NO

RO

LU

FI

DK

SE

DE

BE

PT

IE

GR

AT

FR

SL

NL

CY

HU

ES

CZ

SI

EE

IT

PL

LT

BG

NON-TECH INNOVATORS 0.25 0.27 0.46 0.53 0.59 0.65 0.73 0.74 0.76 0.78 0.84 0.85 0.94 1.12 1.16 1.16 1.19 1.19 1.24 1.28 1.28 1.34 1.34 1.35 1.55 2.42

(Source: http://epp.eurostat.ec.europa.eu/portal/page/portal/science_technology_innovation/data/database

Countries with above-average records of lack of internal funding as highly important factor for hampering innovation, in technological innovators are: Bulgaria (BG), Lithuania (LT), Poland (PL), Italy (IT), Estonia (EE), Slovenia (SI), Czech Republi (CZ), Spain (ES), Hungary (HU), Cyprus <MBIT, 2009-10> page 48

<Vlachaki Efi> (CY), Netherlands (NL), Slovakia (SL), France (FR). Below-average performance is observed for: Austria (AT), Greece (GR), Ireland (IE), Portugal (PT), Belgium (BE), Germany (DE), Sweden (SE), Denmark (DK), Finland (FI), Luxembourg (LU), Romania (RO), Norway (NO), Malta (MT). Missing values are observed for: Latvia (LV), United Kingdom (UK), Iceland (IS). Figure 24: CIS4, lack of external funding per country (technological innovators)
2.00

1.50

EFI

1.00

0.50

0.00

LU DK

NL

FR

MT

FI

BE

DE

CZ

NO

IE

SE

PT

AT

SL

IS

IT

LV

LT

EE

HU

BG

CY

SI

PL

ES

RO

GR

TECH INNOVATORS 0.32 0.54 0.56 0.58 0.58 0.60 0.67 0.68 0.69 0.70 0.75 0.75 0.91 0.92 0.99 0.99 1.13 1.13 1.13 1.16 1.18 1.25 1.43 1.44 1.57 1.59 1.82 1.94

(Source: http://epp.eurostat.ec.europa.eu/portal/page/portal/science_technology_innovation/data/database

Countries with above-average records of lack of external funding, in technological innovators are: Greece (GR), Romania (RO), Spain (ES), Poland (PL), Slovenia (SI), Cyprus (CY), Bulgaria(BG), Hungary (HU), Estonia (EE), Lithuania (LT), Latvia (LV), Italy (IT). Below-average performance is observed for: Iceland (IS), Slovakia (SL), Austria (AT), Portugal (PT), Sweden (SE), Ireland (IE), Norway (NO), Czech Republic (CZ), Germany (DE), Belgium (BE), Finland (FI), Malta (MT), France (FR), Netherlands (NL), Denmark (DK), Luxembourg (LU). Missing values are observed for: United Kingdom (UK). Figure 25: CIS4, lack of external funding per country (non-technological innovators)
2.50 2.00 1.50 EFI 1.00 0.50 0.00

LU

NO

MT

FI

DK

FR

SE

BE

CZ

IE

GR

DE

AT

HU

NL

SL

CY

LT

SI

PT

EE

ES

IT

BG

PL

RO

NON-TECH INNOVATORS 0.23 0.29 0.30 0.49 0.54 0.63 0.65 0.69 0.80 0.93 0.96 0.97 0.98 1.00 1.07 1.07 1.21 1.23 1.35 1.35 1.36 1.38 1.39 1.47 1.56 2.09

(Source: http://epp.eurostat.ec.europa.eu/portal/page/portal/science_technology_innovation/data/database

Countries with above-average records of lack of external funding, in non-technological innovators are: Romania (RO), Poland (PL), Bulgaria (BG), Italy (IT), Spain (ES), Estonia (EE), Portugal (PT), Slovenia (SI), Lithuania (LT), Cyprus (CY), Slovakia (SL), Netherlands (NL), Hungary (HU).

<MBIT, 2009-10>

page 49

<Vlachaki Efi> Below-average performance is observed for: Austria (AT), Germany (DE), Greece (GR), Ireland (IE), Czech Republic (CZ), Belgium (BE), Sweden (SE), France (FR), Denmark (DK), Finland (FI), Malta (MT), Norway (NO), Luxembourg (LU). Missing values are observed for: Iceland (IS), Latvia (LV), United Kingdom (UK). Figure 26: CIS4, belonging to a group per country (technological innovators)
2.50 2.00 1.50 BGI 1.00 0.50 0.00
TECH INNOVATORS

BG 0.15

RO 0.17

HU 0.41

ES 0.44

PL 0.45

GR 0.45

IT 0.51

SL 0.52

LT 0.54

MT 0.64

PT 0.66

CZ 0.74

CY 0.79

FR 1.17

NL 1.19

EE 1.22

FI 1.29

NO 1.30

BE 1.77

DK 1.97

SE 2.09

LU 2.17

DE 2.36

(Source: http://epp.eurostat.ec.europa.eu/portal/page/portal/science_technology_innovation/data/database

Countries with above-average records of enterprises that belong to group in technological innovators are: Germany (DE), Luxembourg (LU), Sweden (SE), Denmark (DK), Belgium (BE), Norway (NO), Finland (FI), Estonia (EE), Netherlands (NL), France (FR). Below-average performance is observed for: Cyprus (CY), Czech Republic (CZ), Portugal (PT), Malta (MT), Lithuania (LT), Slovakia (SL), Italy (IT), Greece (GR), Poland (PL), Spain (ES), Hungary (HU), Romania (RO), Bulgaria (BG). Missing values are observed for: Ireland (IE), Latvia (LV), Austria (AT), Slovenia (SI), United Kingdom (UK), Iceland (IS). Figure 27: CIS4, belonging to a group per country (non-technological innovators)
2.00

1.50

BGI

1.00

0.50

0.00

PL

RO 0.23

BG 0.28

PT 0.45

IT 0.48

ES 0.53

GR 0.56

CZ 0.67

HU 0.69

CY 0.72

EE 0.80

LT 0.91

SL 0.94

DE 1.07

BE 1.27

LU 1.45

FI 1.47

DK 1.53

SE 1.60

FR 1.72

MT 1.78

NL 1.85

NO 1.88

NON-TECH INNOVATORS 0.12

(Source: http://epp.eurostat.ec.europa.eu/portal/page/portal/science_technology_innovation/data/database

Countries with above-average records of enterprises that belong to group in non-technological innovators are: Norway (NO), Netherlands (NL), Malta (MT), France (FR), Sweden (SE), Denmark <MBIT, 2009-10> page 50

<Vlachaki Efi> (DK), Finland (FI), Luxembourg (LU), Belgium (BE), Germany (DE). Below-average performance is observed for: Slovakia (SL), Lithuania (LT), Estonia (EE), Cyprus (CY), Hungary (HU), Czech Republic (CZ), Greece (GR), Spain (ES), Italy (IT), Portugal (PT), Bulgaria (BG), Romania (RO), Poland (PL). Missing values are observed for: Ireland (IE), Latvia (LV), Austria (AT), Slovenia (SI), United Kingdom (UK), Iceland (IS). Figure 28: CIS4, lack of qualified human resources per country (technological innovators)
2.00

1.50

QHRI

1.00

0.50

0.00

DE

NO DK NL

PL

HU

SL BG

MT

SE

FI

CZ

UK

IT

AT

LU

IS

BE

LT

RO

FR CY

ES

IE

SI

LV

EE

GR

PT

TECH INNOVATORS 0.36 0.47 0.53 0.54 0.57 0.58 0.65 0.71 0.71 0.72 0.74 0.79 0.82 0.83 0.84 0.94 1.01 1.06 1.07 1.11 1.17 1.19 1.26 1.43 1.55 1.75 1.81 1.83 1.93

(Source: http://epp.eurostat.ec.europa.eu/portal/page/portal/science_technology_innovation/data/database

Countries with above-average records about the lack of human resources in technological innovators are: Portugal (PT), Greece (GR), Estonia (EE), Latvia (LV), Slovenia (SI), Ireland (IE), Spain (ES), Cyprus (CY), France (FR), Romania (RO), Lithuania (LT), Belgium (BE), Iceland (IS). Below-average performance is observed for: Luxembourg (LU), Austria (AT), Italy (IT), United Kingdom (UK), Czech Republic (CZ), Finland (FI), Sweden (SE), Malta (MT), Bulgaria (BG), Slovakia (SL), Hungary (HU), Poland (PL), Netherlands (NL), Denmark (DK), Norway (NO), Germany (DE). Figure 29: CIS4, lack of qualified human resources per country (non-technological innovator)
2.00

1.50

QHRI

1.00

0.50

0.00

DE

NO DK NL

PL

HU

SL BG

MT

SE

FI

CZ

UK

IT

AT

LU

IS

BE

LT

RO

FR CY

ES

IE

SI

LV

EE

GR

PT

TECH INNOVATORS 0.36 0.47 0.53 0.54 0.57 0.58 0.65 0.71 0.71 0.72 0.74 0.79 0.82 0.83 0.84 0.94 1.01 1.06 1.07 1.11 1.17 1.19 1.26 1.43 1.55 1.75 1.81 1.83 1.93

(Source: http://epp.eurostat.ec.europa.eu/portal/page/portal/science_technology_innovation/data/database )

<MBIT, 2009-10>

page 51

<Vlachaki Efi> Countries with above-average records about the lack of human resources in non-technological innovators are: Portugal (PT), Cyprus (CY), Spain (ES), France (FR), Estonia (EE), Slovenia (SI), Romania (RO), Greece (GR), Italy (IT), Ireland (IE), Lithuania (LT), Belgium (BE), Bulgaria (BG). Below-average records are observed for: Luxembourg (LU), Austria (AT), Denmark (DK), Hungary (HU), Finland (FI), Sweden (SE), Slovakia (SL), Czech Republic (CZ), Poland(PL), Germany (DE), Netherlands (NL), Malta (MT), Norway (NO). Missing values are observed for: Latvia (LV), United Kingdom (UK), Iceland (IS).

5.2.3 Throughputs analysis by sector

Throughput analysis includes the analysis of registered trademarks, market-introduction activities and other preparations. It is reasonable that data about the last two variables refer exclusively to innovative firms since they are required the introduction either of a product or process innovation. Figure 30: CIS4, registered trademarks per sector
1.20 1.00 0.80 0.60 TMI 0.40 0.20 0.00 TECHNOLOGICAL INNOVATORS C_D_E G_TO_K 1.13 0.80 NON-TECHNOLOGICAL INNOVATORS 1.12 0.79

(Source: http://epp.eurostat.ec.europa.eu/portal/page/portal/science_technology_innovation/data/database )

Higher percentage of enterprises in total industry (excluding construction) registered trademarks in comparison to that of services. More specifically, the percentage of the technological innovators in total industry that registered a trademark is almost 41% higher than the corresponding percentage of services while the percentage of the non-technological innovators firms in total industry is almost 42% higher than the corresponding percentage in services. Overall, industry (excluding construction) is above-average while services (excluding public administration) are belowaverage in both groups (technological and non-technological innovators). Figure 31: CIS4, market-introduction activities per sector
1.20 1.00 0.80 0.60 MKI 0.40 0.20 0.00 C_D_E TECHNOLOGICAL INNOVATORS 0.97 G_TO_K 1.01

(Source: http://epp.eurostat.ec.europa.eu/portal/page/portal/science_technology_innovation/data/database )

<MBIT, 2009-10>

page 52

<Vlachaki Efi> Almost same percentage of enterprises that engaged in market-introduction activities (e.g. market research and launch advertising) is observed for total industry (excluding construction) and services (excluding public administration). Overall, both sectors are above average. Figure 32: CIS4, other preparations per sector
1.20 1.00 0.80 0.60 OPI 0.40 0.20 0.00 TECHNOLOGICAL INNOVATORS C_D_E 1.00 G_TO_K 0.87

(Source: http://epp.eurostat.ec.europa.eu/portal/page/portal/science_technology_innovation/data/database )

Higher percentage of enterprises that engaged in other preparations (Procedures and technical preparations to implement new or significantly improved products and processes that are not covered elsewhere) is observed for total industry (excluding construction) in comparison to services (excluding public administration). More specifically, the percentage of the technological innovators in total industry that engaged in other preparations is almost 15% higher than the corresponding percentage of services. Overall, total industry is average while services are below-average.

5.2.4 Throughputs analysis by country

Figure 33: CIS4, registered trademarks per country (technological innovators)
2.00

1.50

TMI

1.00

0.50

0.00

CY

MT

PT

BE

NL

BG

NO

HU

FI

PL

DK

ES

IT

RO

DE

FR

SL

EE

IE

CZ

LU

LT

GR

TECHNOLOGICAL INNOVATORS 0.08 0.27 0.33 0.33 0.43 0.52 0.66 0.73 0.74 0.75 0.75 0.79 1.21 1.31 1.38 1.42 1.42 1.43 1.59 1.60 1.61 1.75 1.90

(Source: http://epp.eurostat.ec.europa.eu/portal/page/portal/science_technology_innovation/data/database )

Countries with above-average records of registered trademarks, in technological innovators are: Greece (GR), Lithuania (LT), Luxembourg (LU), Czech Republic (CZ), Ireland (IE), Estonia (EE), France (FR), Slovakia (SL), Germany (DE), Romania (RO), Italy (IT). Below-average performance is observed for: Spain (ES), Denmark (DK), Poland (PL), Finland (FI), Hungary (HU), Norway <MBIT, 2009-10> page 53

<Vlachaki Efi> (NO), Bulgaria (BG), Netherlands (NL), Belgium (BE,) Portugal (PT), Malta (MT), Cyprus (CY). Missing values are observed for: Latvia (LV), Austria (AT), Slovenia (SI), Sweden (SE), United Kingdom (UK), Iceland (IS). Figure 34: CIS4, registered trademarks per country (non-technological innovators)
3.00 2.50 2.00 TMI 1.50 1.00 0.50 0.00

CY

BG

NL

BE

FI

PL

NO

PT

RO

ES

HU

DK

IE

FR

LT

DE

EE

SL

CZ

IT

LU

GR

NON-TECHNOLOGICAL INNOVATORS 0.00 0.12 0.15 0.19 0.20 0.27 0.29 0.37 0.70 0.71 0.78 1.00 1.02 1.40 1.40 1.46 1.56 1.71 1.84 2.00 2.04 2.78

(Source: http://epp.eurostat.ec.europa.eu/portal/page/portal/science_technology_innovation/data/database )

Countries with above-average records of registered trademarks, in non-technological innovators are: Greece (GR), Luxembourg (LU), Italy (IT), Czech Republic (CZ), Slovakia (SL), Estonia (EE), Germany (DE), Lithuania (LT), France (FR), Ireland (IE), Denmark (DK). Below-average performance is observed for: Hungary (HU), Spain (ES), Romania (RO), Portugal (PT), Norway (NO), Poland (PL), Finland (FI), Belgium (BE), Netherlands (NL), Bulgaria (BG), Cyprus (CY). Missing values are observed for: Latvia (LV), Malta (MT), Austria (AT), Slovenia (SI), Sweden (SE), United Kingdom (UK), Iceland (IS). Figure 35: CIS4, market-introduction activities per country (technological innovators)
2.00

1.50

MKI

1.00

0.50

0.00
TECHNOLOGICAL INNOVATORS

PL 0.45

IT 0.68

NO 0.68

CY 0.79

BG 0.81

ES 0.81

MT 0.89

RO 0.90

DE 0.91

HU 0.94

FR 0.96

NL 0.96

BE 1.03

SE 1.04

PT 1.05

EE 1.09

DK 1.21

LT 1.24

CZ 1.28

SL 1.34

GR 1.43

LU 1.51

(Source: http://epp.eurostat.ec.europa.eu/portal/page/portal/science_technology_innovation/data/database )

Countries with above-average market-introduction activities are: Luxembourg (LU), Greece (GR), Slovakia (SL), Czech Republic (CZ), Lithuania (LT), Denmark (DK), Estonia (EE), Portugal (PT), Sweden (SE), Belgium (BE). Below-average performance is observed for: Netherlands (NL), <MBIT, 2009-10> page 54

<Vlachaki Efi> France (FR), Hungary (HU), Germany (DE), Romania (RO), Malta (MT), Spain (ES) Bulgaria (BG), Cyprus (CY), Norway (NO), Italy (IT), Poland (PL). Missing values are observed for: Ireland (IE), Latvia (LV), Austria (AT), Slovenia (SI), Finland (FI), United Kingdom (UK), Iceland (IS). Figure 36: CIS4, other preparations per country (technological innovators)
2.00

1.50

OPI

1.00

0.50

0.00
TECHNOLOGICAL INNOVATORS

PL 0.29

LT 0.63

ES 0.73

GR 0.74

NO 0.76

NL 0.76

MT 0.81

HU 0.82

FR 0.83

RO 0.85

IT 0.88

BE 0.94

SL 0.99

PT 1.03

SE 1.05

BG 1.07

LU 1.10

CZ 1.23

EE 1.41

CY 1.56

DE 1.61

DK 1.92

(Source: http://epp.eurostat.ec.europa.eu/portal/page/portal/science_technology_innovation/data/database )

Countries with above-average engagement in other preparations are: Denmark (DK) Germany (DE) Cyprus (CY), Estonia (EE), Czech Republic (CZ), Luxembourg (LU), Bulgaria (BG), Sweden (SE), Portugal (PT). Below-average performance is observed for: Slovakia (SL), Belgium (BE), Italy (IT), Romania (RO), France (FR), Hungary (HU), Malta (MT), Netherlands (NL), Norway (NO), Greece (GR), Spain (ES), Lithuania (LT), Poland (PL). Missing values are observed for: Ireland (IE), Latvia (LV), Austria (AT), Slovenia (SI), Finland (FI), United Kingdom (UK), Iceland (IS).

5.2.5 Outputs analysis per sector

Figure 37: CIS4, marketing innovators per sector
1.20 1.00 0.80 0.60 0.40 0.20 MII 0.00 TECHNOLOGICAL INNOVATORS C_D_E G_TO_K 0.97 1.03 NON-TECHNOLOGICAL INNOVATORS 1.01 1.01

(Source: http://epp.eurostat.ec.europa.eu/portal/page/portal/science_technology_innovation/data/database )

Above-average performance is recorded for services. Industry scores above-average performance as non-technological innovator while it scores below-average as technological innovator. <MBIT, 2009-10> page 55

<Vlachaki Efi>

5.2.6 Outputs analysis per country

Figure 38: CIS4, marketing innovators per country (technological innovators)
2.00

1.50

MII

1.00

0.50

0.00

RO

ES

NL

SL

DK

IT

DE

IE

LT

HU

FR

PT

BG

CZ

GR

BE

AT

EE

MT

LU

NO

PL

CY

TECHNOLOGICAL INNOVATORS 0.14 0.67 0.75 0.81 0.83 0.84 0.91 1.00 1.00 1.00 1.00 1.02 1.04 1.05 1.05 1.06 1.14 1.15 1.21 1.23 1.32 1.39 1.40

(Source: http://epp.eurostat.ec.europa.eu/portal/page/portal/science_technology_innovation/data/database )

Countries with above-average records as marketing innovators are: Cyprus (CY), Poland (PL), Norway (NO), Luxembourg (LU), Malta (MT), Estonia (EE), Austria (AT), Belgium (BE), Czech Republic (CZ), Greece (GR), Bulgaria (BG), Portugal (PT), France (FR), Hungary (HU), Lithuania (LT), Ireland (IE). Countries with below-average records are: Germany (DE), Italy (IT), Denmark (DK), Slovakia (SL), Netherlands (NL), Spain (ES), Romania (RO). Missing values for: Latvia (LV), Slovenia (SI), Finland (FI), Sweden (SE), United Kingdom (UK), Iceland (IS). Figure 39: CIS4, marketing innovators per country (non-technological innovators)
3.00 2.50 2.00 MII
1.50 1.00 0.50 0.00

RO

SL

BG

ES

NL

LT

EE

PL

CZ

BE

NO

HU

FR

PT

MT

DE

DK

IT

AT

IE

GR

LU

CY

NON-TECHNOLOGICAL INNOVATORS 0.14 0.33 0.41 0.43 0.58 0.62 0.89 0.89 0.96 0.98 0.99 1.02 1.02 1.04 1.04 1.08 1.16 1.20 1.20 1.28 1.46 1.51 2.76

(Source: http://epp.eurostat.ec.europa.eu/portal/page/portal/science_technology_innovation/data/database )

Countries with above-average records as marketing innovators are: Cyprus (CY), Luxembourg (LU), Greece (GR), Ireland (IE), Austria (AT), Italy (IT), Denmark (DK), Germany (DE), Malta (MT), Portugal (PT), France (FR), Hungary (HU). Countries with below-average records are: Norway (NO), Belgium (BE), Czech Republic (CZ), Poland (PL), Estonia (EE), Lithuania (LT), Netherlands (NL), Spain (ES), Bulgaria (BG), Slovakia (SL), Romania (RO). Missing values for: Latvia (LV), Slovenia (SI), Finland (FI), Sweden (SE), United Kingdom (UK), Iceland (IS). <MBIT, 2009-10> page 56

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5.3 Summary Results

After the analysis per group, sector and country there are some conclusions about the determinants of marketing innovation, the differences between technological and non-technological, between industrial and service firms and between countries. Table 19: Summary results by sector
SECTOR & GROUP/ INDICATOR SECTOR GROUP PFI IFI INPUTS EFI BGI QFRI TMI THROUPUTS MKI OPI OUTPUTS MII

Total Industry (excluding construction) Total Services (excluding public administration) AA: index
1, BA: index < 1.

TECH NON TECH TECH NON TECH

AA n/a BA n/a

AA AA BA BA

AA AA BA BA

BA BA BA AA

AA AA BA BA

AA AA BA BA

BA n/a AA n/a

AA n/a BA n/a

BA AA AA AA

Summarizing the overall performance of the two industries one may conclude that: Service technological innovators score higher as marketing innovators in comparison to technological innovators. Non-technological innovators do not demonstrate any difference across these two sectors (they score steadily above the average). Nevertheless, industrial nontechnological score above-average while industrial technological innovators score belowaverage. So, non-technological and service innovators score higher as marketing innovators Industry scores above-average in public funding while services score below average. As Pilat (2008) argues, service firms are potentially just as innovative as manufacturing firms; nevertheless their innovative capacity is often constrained by inadequate policies. Many governments do not yet sufficiently consider services firms in their policies to foster innovation. Although services score below-average in public funding, they continue to be marketing innovators. This means that public funding has not influenced significantly their performance as marketing innovators. The performance of technological and non-technological indicators for the three categories (inputs, throughputs and outputs) does not seem to differ within the two sectors. Belonging to a group is the exception of this observation. In the total industry, the percentage of technological firms that belong to a group is average while the percentage of non-technological firms that belong to a group is below average. In services, the percentage of technological firms that belong to a group is below average while the percentage of non-technological firms that belong to a group is above average. This may indicate that the firms that engaged in non-technological service innovations are more possible to function as complimentary units of the core firm of the group (e.g. consulting companies in a group). A much higher percentage of industrial enterprises report a highly important lack of internal/external funding and qualified personnel in comparison to service enterprises. For industrial technological innovators, this may be consistent with what Schubert has proposed since they score below-average as marketing innovators. A lack of resources may hamper a broad innovation strategy that includes also other types of innovation such as marketing innovation. So, a lack of internal and external funds may enable the company to engage in a specific range of innovations (process and product) and prevent it from proceeding with other forms (marketing and technological). For non-technological innovators important lack of resources (financial and human) does not prove to be a reversed indicator. Above average records of highly important lack resources do page 57

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<Vlachaki Efi> not result as expected- to a below average records of marketing innovators. This may imply three arguments:
Lack of internal/ external funding and qualified human resources does not influence marketing innovation performance in total industry (excluding construction).
Lack of internal/ external funding may influence in a positive way a marketing innovation. This may imply that although a lack of funding may force a company to focus on technological innovations. Nevertheless, if these funds are quite low for a process or a product innovation, a firm may react choosing a less heavy capital and labour investment in marketing innovation.
The indicator that refers to the importance of lack of the above resources may not be able to reflect the lack of these resources in a correct way. If a company reports a medium important lack of funding, it does not necessarily mean that this company possess more funds than a company that reports a highly important lack. This argument does not reverse the importance of the above indicator. Nevertheless, it would be quite useful for our implications to have access to the total turnover of the involved firms. Industry scores above average in registering a trademark while services score below average. The difference between service and industry sector in IP (patents, designs, copyright) has been mentioned also by Arundel, Kanerva, Cruysen, and Hollanders (2007). This was explained by the authors due to the lack of information or experience with using IP or due to the lack of service innovations that can be protected by IP. Nevertheless, since services are difficult to be patented and the role of trademarks as a quality guarantee seems quite promising, it would be reasonable to assume that the above gap is going to be decreased in the following CIS results. Similarly to public funding this indicator does not seem to influence significantly the performance of services as marketing innovators. Services report a higher average in market introduction activities. As it has been already mentioned if a new product/service is introduced into the market, this requires adjustment to marketing. So, above average market introduction activities may influence positively above average performance as marketing innovator in services. Data about other preparations (procedures and technical preparations to implement new or significantly improved products and processes that are not covered elsewhere) do not create a consistent observation. A below-average percentage of enterprises that perform other preparations is connected with an above-average performance as marketing innovators and vice versa. In contrast with market introduction activities, other preparations do not appear to be correlated with marketing innovation.

To sum up, services seem to have a higher potential as marketing innovators in comparison to industry despite of the fact that they are publicly underfunded. Important lack of resources seems to affect technological industrial innovators in comparison to non-technological industrial innovators. Trademarking is below average for services although it is argued that future data are predicted reveal an increase of registered trademarks for this sector. Above-average activities for the launch of services correspond to an above-average percentage of marketing innovators. Other preparations do not seem to be correlated to the introduction of a marketing innovation.

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<Vlachaki Efi> Table 20: Summary results by country

COUNTRY & GROUP/ INDICATOR SECTOR GROUP Belgium TECH NON TECH Bulgaria TECH NON TECH Czech Republic TECH NON TECH Denmark TECH NON TECH Germany TECH NON TECH Estonia TECH NON TECH Ireland TECH NON TECH Greece TECH NON TECH Spain TECH NON TECH France TECH NON TECH Italy TECH NON TECH Cyprus TECH NON TECH Latvia TECH NON TECH Lithuania TECH NON TECH Luxembourg TECH NON TECH Hungary TECH NON TECH Malta TECH NON TECH Netherlands TECH NON TECH Austria TECH NON TECH Poland TECH NON TECH Portugal TECH NON TECH Romania TECH NON TECH Slovenia TECH NON TECH Slovakia TECH NON TECH Finland TECH NON TECH Sweden TECH NON TECH United Kingdom TECH NON TECH Iceland TECH NON TECH Norway TECH NON TECH
AA: index
1, BA: index < 1

PFI AA n/a BA n/a BA n/a BA n/a BA n/a BA n/a : n/a AA n/a AA n/a BA n/a AA n/a AA n/a : n/a BA n/a AA n/a AA n/a BA n/a AA n/a AA n/a BA n/a BA n/a BA n/a : n/a BA n/a AA n/a : n/a : n/a : n/a AA n/a

IFI BA BA AA AA AA AA BA BA BA BA AA AA AA BA AA BA AA AA AA AA BA AA AA AA BA : AA AA BA BA AA AA BA BA BA AA BA BA AA AA BA BA BA BA AA AA AA AA BA BA AA BA : : BA : BA BA

INPUTS EFI BGI BA AA BA AA AA BA AA BA BA BA BA BA BA AA BA AA BA AA BA AA AA AA AA BA BA : BA : AA BA BA BA AA BA AA BA BA AA BA AA AA BA AA BA AA BA AA BA : : : : AA BA AA BA BA AA BA AA AA BA AA BA BA BA BA AA BA AA AA AA BA : BA : AA BA AA BA BA BA AA BA AA BA AA BA AA : AA : BA BA AA BA BA AA BA AA BA AA BA AA : : : : : : : : BA AA BA AA

QFRI AA AA BA AA BA BA BA BA BA BA AA AA AA AA AA AA AA AA AA AA BA AA AA AA AA : AA AA BA BA BA BA BA BA BA BA BA BA BA BA AA AA AA AA AA AA BA BA BA BA BA BA BA : AA : BA BA

TMI BA BA BA BA AA AA BA AA AA AA AA AA AA AA AA AA BA BA AA AA AA AA BA BA : : AA AA AA AA BA BA BA : BA BA : : BA BA BA BA AA AA : : AA AA BA BA : : : : : : BA BA

THROUPUTS MKI OPI AA BA n/a n/a BA AA n/a n/a AA AA n/a n/a AA AA n/a n/a BA AA n/a n/a AA AA n/a n/a : : n/a n/a AA BA n/a n/a AA BA n/a n/a BA BA n/a n/a BA BA n/a n/a BA AA n/a n/a : : n/a n/a AA BA n/a n/a AA AA n/a n/a BA BA n/a n/a BA BA n/a n/a AA BA n/a n/a : : n/a n/a BA BA n/a n/a AA AA n/a n/a BA BA n/a n/a : : n/a n/a AA BA n/a n/a : : n/a n/a AA AA n/a n/a : : n/a n/a : : n/a n/a BA BA n/a n/a

OUTPUTS MII AA AA AA BA AA BA BA AA BA AA AA BA AA AA AA AA BA BA AA AA BA AA AA AA : : AA BA AA AA AA AA AA AA BA BA AA AA AA BA AA AA BA BA : : BA BA : : : : : : : : AA BA

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<Vlachaki Efi> Summarising the overall performance of the involved countries one may conclude that: The performance of technological and non-technological indicators does not seem to differ in each country for inputs and throughputs (trademarking). An underfunded technological innovator corresponds to an underfunded non-technological in the most countries and vice versa. The highest score as technological marketing innovators belongs to Cyprus (CY), Poland (PL), Norway (NO), Luxembourg (LU), Malta (MT), Estonia (EE), Austria (AT). The highest scores as non-technological marketing innovators belongs to Cyprus (CY), Luxembourg (LU), Greece (GR), Ireland (IE), Austria (AT), Italy (IT), Denmark (DK). The high performance of Cyprus is confirmed also by the corresponding SME Fact Sheets. More specifically according to this document: Cyprus is actually far above the average in terms of the share of enterprises having introduced marketing innovation. Upon Eurostat SBS database, 2004 and 2005 data, this percentage is almost 54% as compared to the EU average of ca. 36% (European Commission, Enterprise and Industry, n.d.). Usually an above-average highly important lack of internal funding corresponds to a highly important lack of external funding. Almost 38% reports lack of internal funding as a highly important factor both in technological and non-technological group (4 missing values for internal funding and 12 missing values for marketing innovators). 63% of these countries possess below-average score as marketing innovator in one of the two groups (technological and non-technological). Almost 35% reports lack of external funding as a highly important factor both in technological and non-technological group (6 missing values for external funding and 12 missing values for marketing innovators). 60% of these countries possess below-average score as marketing innovator in one of the two groups (technological and non-technological). Almost 3% reports lack of qualified human resources as a highly important factor both in technological and non-technological group (3 missing values for qualified human resources and 12 missing values for marketing innovators). 30% of these countries possess below-average score as marketing innovator in one of the two groups (technological and non-technological). The highest score for trademarking is observed for Greece although in absolute numbers Greece ranks as seventh.

5.4 Limitations & Further Improvements

Through the analysis upon CIS4, we should also take into consideration some limitations of the innovation survey: there is only one observation period for data relevant to marketing innovation. There are no data about marketing innovation in the results of CIS2006, missing values for specific indicators (total number of employees and total turnover), missing values for specific countries (9/29 countries possess at least one missing value), based on the objective assessment of the involved firms. lack of data specified in marketing innovation.

Missing values throughout the countries and the reference years are reasonable to influence the significance of statistical data. Observations have been made; nevertheless a high rate of missing values restricts any statistical confirmation. Moreover, the lack of information about total turnover

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<Vlachaki Efi> and human resources restricts any further control of the indicator highly important lack of human and financial resources. According to OECD (2006), CIS should be developed further towards two directions: more information on innovation according to each economic sector and region, i more information on knowledge and technology dissemination, organisational and marketing innovation, innovation and public procurement.

CIS2008, based on the 2005 version of Oslo Manual, covers much more comprehensively the scope of marketing innovation offering thus more opportunities in marketing innovation measurement. Apart from the limitations of the primary data, it would be useful to note some limitations and further improvements for the approach that was proposed. Other preparations seem not to be highly correlated with the introduction of marketing innovation. Although one should take into account that indicators are partial pictures of innovative performance -so an increase in them does not necessarily mean a better outcome for the whole economy; it would be better to focus on the marketing innovative activities that module on CIS2008 proposes. Furthermore, an indicator that belongs to throughputs and was neglected is the introduction of technological innovations (process and product). High rated market introduction activities of services/products correspond to an above average score as marketing innovator. Moreover, technological and non-technological in industrial and service sectors seem to differ in some indicators such as the lack of funds.

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6 CONCLUSIONS
The evolution of marketing could be described as a product lifecycle. After World War II marketing concept started replacing the prevalent selling concept (hard sell) with an outside-in perspective based on profits through customer satisfaction (customer is king). Consumers could afford to be more selective and enterprises, used to sell what they produced, should start selling what customer needs. Marketing concept dominated around 1950 and continued growing throughout the enterprises till its value started being questioned. Internet has enabled mass customisation concept stimulating questions about the replacement of marketing function by technology. Despite of its redefinitions, marketing innovation may not be able to keep its dominant position following the classical product lifecycle to the decline stage. During the last decades technological innovations have been recognised as an important driver of performance. Although, existing marketing concepts have been incorporated in the launch of these innovations, as Rekettye (2003) has suggested, a considerable part of new product failures is contributed to the lack of a new marketing concept. In other words, technological innovations demand a corresponding change in marketing. Apart from the need to act as complimentary to traditional forms of innovation, marketing innovations have proved to be strong enough to enable especially SMEs to compete effectively larger enterprises. Nowadays, focus on customers needs has been widely accepted and it is still valid. Nike iD platform, iphone apps, Second Life virtual platform, IdeaBounty crowdsourcing platform are some examples of innovations that confirm the prevalence of the critical role of consumer. Nevertheless, it is clear that the traditional marketing concept is in the maturity stage failing to enable firms to differentiate their market offer and obtain a competitive advantage. Similarly to product lifecycle concept, what could reverse the decline of marketing is innovation. Innovation in marketing could introduce new marketing methods that enhance firms ability to satisfy both consumer and corporate needs. Figure 40: Marketing concept lifecycle

So, since marketing innovation is able to produce value, marketing innovation measurement is a necessary part of marketing management. Nevertheless, due to the fact that marketing innovation is a quite new concept both for theorists and practitioners, innovation measurement analysis indicates two key directions for further improvement: i. better understanding of marketing innovation types so as to be able to distinguish them, ii. creation of reliable historical data.

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OECD. (1997). Oslo Manual: The measurement of scientific and technological activities. Proposed guidelines for collecting and interpreting technological innovation data, 2nd Edition. OECD Publications. Retrieved from http://www.oecd.org/dataoecd/35/61/2367580.pdf OECD. (2005). Oslo Manual: Guidelines for Collecting and Interpreting Innovation Data, 3rd Edition. OECD Publications. Retrieved from http://www.ttgv.org.tr/UserFiles/File/OSLO-EN.pdf OECD. (2006). Community innovation statistics: From todays community innovation surveys to better surveys tomorrow. Retrieved from http://www.oecd.org/dataoecd/37/39/ 37489901.pdf Oronzco, D. and Conley, J. (2008). Shape of Things to Come. How Apple's trademark for its iPod protects its brand -and offers lessons for other companies on how to leverage their intellectual property. The Wall Street Journal. Retrieved from http://online.wsj.com/article/SB121018802603674487.html Panne, V. G. (2007). Issues in measuring innovation. Scientometrics. 71, pp. 495-507. Pilat, D. (2008). Factors and policies affecting services innovation: some findings from OECD work. Lisbon Council, Brussels. 27 November 2008. Retrieved from www.lisboncouncil.org/component/downloads/?id=41 PRO INNO Europe. (2009). European innovation scoreboard 2008: Comparative analysis of innovation performance. Publications Office. 10, 1-49. Retrieved from http://www.proinnoeurope.eu/admin/uploaded_documents/EIS2008_Final_report-pv.pdf Rekettye, G. (2003). The regularities of innovation a marketing perspective. Acta Oeconomica. 53 (1). 4559. Richard, D. M., Womack, A. J. and Allaway, W. A. An Integrated View of Marketing Myopia. 1992. the Journal of Consumer Marketing. 9 (3). 65-71. Ries, A. and Trout, J. (2000). The battle for your mind. McGraw-Hill. 20th Anniversary Edition. 156-158. Retrieved from http://www.google.com/books?hl=el&lr=&id=3hjG01OzMGYC&oi=fnd&pg=PA1&dq=The+battle+for+your+mind.+ &ots=0CVHwO3tJA&sig=rcZnz0YyU996llExlZW3A10hk5E#v=onepage&q=&f=false Ringold, J. D. and Weitz, B. (2007). The American Marketing Association Definition of Marketing: Moving from Lagging to Leading Indicator. 26, 2. Fall. 251260. Samuelson, P. (2009). What Effects Do Legal Rules Have on Service Innovation. Berkeley Center for Law and Technology. 70, 1-23. Retrieved from http://escholarship.org/uc/item/7h02w1p7 Schilling, A. M. (2008). Strategic Management of Technological Innovation. International Edition. McGraw-Hill Education, 18. Schmidt, T. and Rammer, C. (2006). The determinants and effects of technological and non technological innovations Evidence form the German CIS IV. Shortened version. 1-26. Retrieved from http://www.oecd.org/dataoecd/10/43/37450197.pdf Schmidt, T. and Rammer, C. (2007). Non-technological and Technological Innovation: Strange Bedfellows? Discussion Paper No. 07-052. 1-47. Retrieved from ftp://ftp.zew.de/pub/zew-docs/dp/dp07052.pdf Schubert, T. (2009). Marketing and Organisational Innovations in Entrepreneurial Innovation Processes and their Relation to Market Structure and Firm Characteristics. 1-27. Retrieved from http://www.socialpolitik.ovgu.de/sozialpolitik_media/paper_update/Schubert_Torben_uid35_pid14-p-532.pdf Schumpeter, J. A. (1991). Critical Assessments. Edited by John Cunningham Wood, Taylor & Francis. Retrieved from http://books.google.com/books?hl=el&lr=&id=Y0kYinlHadoC&oi=fnd&pg=PA38&dq=innovation+the-commercialor-industrial-application+schumpeter&ots=mFzfJNnR3J&sig=N1fwrOG2kU7erLAAEaCtvdmrsxc#PPP1,M1 Shapiro, R. A. (2006). Measuring innovation: beyond revenue from new products. Research Technology Management. 49 (6), 42-51. Stone, A., Rose, S., Lal, B. and Shipp, S. (2008). Measuring Innovation and Intangibles: A Business Perspective. Institute for Defense Analyses, Science & Technology Policy Institute. 1-E27. Retrieved from http://www.athenaalliance.org/pdf/MeasuringInnovationandIntangibles-STPI-BEA.pdf Sweezy, M. P. (1943). Professor Schumpeters Theory of Innovation. The Review of Economic Statistics. 25 (1). 93-96. WIPO. (2006). Inventing the Future: An Introduction to Patents for Small and Medium-sized Enterprises. WIPO Publications. Intellectual Property for Business Series. 3, 1-50. Retrieved from http://www.wipo.int/export/sites/www/freepublications/en/sme/917/wipo_pub_917.pdf

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WIPO. (2006). Standing committee on the law of trademarks, industrial designs and geographical indications. New types of marks. Document prepared by the Secretariat. Retrieved from http://www.wipo.int/edocs/mdocs/sct/en/sct_16/sct_16_2.pdf WIPO. (2009). Smell, Sound and Taste Getting a Sense of Non-Traditional Marks. WIPO Magazine. Retrieved from http://www.wipo.int/wipo_magazine/en/2009/01/article_0003.html Zinkhan, M. G. and Williams, C. B. (2007). The New American Marketing Association Definition of Marketing: An Alternative Assessment. Journal of Public Policy & Marketing. 26 (Fall). 28488.

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ANNEX
ANNEX I: INDUSTRIAL PROPERTY ANALYSIS ANNEX II: COMMUNITY INNOVATION SURVEYS, THE QUESTIONNAIRES

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INDUSTRIAL PROPERTY
Industrial property can be divided into two main areas. The first area refers to the protection of distinctive signs and includes trademarks and geographical indications. The protection of this type of industrial property promotes fair competition and honest practices while enables consumer buying behaviour. The second area does not serve such market needs; nevertheless, it aims primarily at stimulating innovation, design and the creation of technology. This area includes inventions, industrial designs and trade secrets (www.wto.org). Trademarks According to WIPO, a trademark is a distinctive sign, which identifies certain goods or services as those produced or provided by a specific person or enterprise. Similarly, according to the Agreement on Trade-Related Apects of Intellectual Property Rights (TRIPS), any sign, or any combination of signs, capable of distinguishing the goods and services of one undertaking from those of other undertakings, must be eligible for registration as a trademark, provided that it is visually perceptible (www.wto.org). Trademarks may be one or a combination of words, letters, and numerals. They may consist of drawings, symbols, three-dimensional signs such as the shape and packaging of goods, audible signs such as music or vocal sounds, fragrances, or colors used as distinguishing features. Millot (2009) notes three dimensions of trademark: i. substance. Any kind of sign is eligible for registration: denominations, letters, numerals, figurative signs, combinations of colours, sonorous signs, or any combination of those elements. ii. function. A trademark should uniquely identify and distinguish goods or services of one undertaking from those of other undertakings. iii. legal terms. As a type of industrial property, trademark is susceptible of being protected by the law so that the owner of the trademark (that can be any natural or legal person) has the exclusive right of using it. Trademark ownership According to TRIPS Agreement (Article 16.2 and 3), the owner of a registered trademark must be granted the exclusive right to prevent all third parties not having the owner's consent from using in the course of trade identical or similar signs for goods or services which are identical or similar to those in respect of which the trademark is registered where such use would result in a likelihood of confusion. In case of the use of an identical sign for identical goods or services, a likelihood of confusion must be presumed (www.wto.org). An application for registration of a trademark must: i. be first filled with the appropriate national or regional trademark office, ii. contain a clear reproduction of the sign filed for registration, including any colours, forms, or three-dimensional features. iii. contain a list of goods or services to which the sign would apply. iv. fulfil certain conditions in order to be protected as a trademark or other type of mark. v. be distinctive, so that consumers can distinguish it as identifying a particular product, as well as from other trademarks identifying other products. vi. neither mislead nor deceive customers or violate public order or morality.

vii. the rights applied for cannot be the same as, or similar to, rights already granted to another trademark owner. This may be determined through search and examination by the national office, or by the opposition of third parties who claim similar or identical rights (http://www.wipo.int/trademarks/en/). Trademarks are registered and protected by national or regional offices in almost all countries. Each office maintains a Register of Trademarks that contains full application information on all registrations and renewals, facilitating examination, search, and potential opposition by third parties. The action of these offices is limited to one country or to specific countries (in the case of regional offices) Nevertheless, the expansion of the brands into new markets required the expansion of their protection to other countries. The main international system of trademarks registration is the Madrid System. Established in 1891, the Madrid System functions under the Madrid Agreement and the Madrid Protocol. It is administered by the International Bureau of WIPO and offers a trademark owner the possibility to have his trademark protected in several countries by simply filing one application directly with his own national or regional trademark office (http://www.wipo.int/madrid/en/). Another multinational registration system is Community Trademark (CTM) system. It was introduced in 1996 to cover the whole of the European Union and is valid in all 27 Member States. A CTM grants its proprietor an exclusive right to use the trademark and to prevent third parties to use, without consent, the same or a similar mark for identical or similar goods and/or services as those protected by the CTM (http://oami.europa.eu/ows/rw/pages/CTM/index.en.do). The number of the trademarks that has been registered by OHIM is increasing rapidly every year while the time taken to register a CTM has fallen significantly over recent years. On average, where national searches are not requested, it now takes 26 weeks to registration for applications with no deficiencies (http://www.wipo.int/trademarks/en/). A wider expansion than CTM, Triadic Patents possess. Triadic patents are a series of corresponding patents filed at the European Patent Office (EPO), the United States Patent and Trademark Office (USPTO) and the Japan Patent Office (JPO), for the same invention, by the same applicant or inventor. Other types of marks Service mark is a distinctive sign which identifies certain services as those provided by a specific person, enterprise or a group of persons/enterprises allowing the consumer to distinguish them from services of others (http://www.wipo.int/sme/en/ip_business/marks/mark_procedure.htm).In addition to trade/ service marks that distinguish the goods or services, there are some types of marks that distinguish the sellers themselves such as collective or certification marks. Collective marks are owned by an association whose members use them to identify themselves with a level of quality and other requirements set by the association. Examples of such associations would be those representing accountants, engineers, or architects. Certification marks are given for compliance with defined standards, but are not confined to any membership. They may be granted to anyone who can certify that the products involved meet certain established standards. The internationally accepted "ISO 9000" quality standards are an example of such widely-recognized certifications (http://www.wipo.int/trademarks/en/). Geographical Indications A geographical indication (GI) is a sign used on goods that have a specific geographical origin and possess qualities, reputation or characteristics that are essentially attributable to that origin. An appellation of origin (AO) is a special kind of GI. GIs can be protected through a wide range of laws such as laws specifically for the protection of GIs or AOs, trademark laws in the form of collective

marks or certification marks, laws against unfair competition, consumer protection laws (http://www.wipo.int/geo_indications/en/) Inventions (patents) According to WIPO, a patent is an exclusive right granted by the State for an invention that is new, involves an inventive step and is capable of industrial application. Patent gives its owner the exclusive right to prevent or stop others from making, using, offering for sale, selling or importing a product or a process, based on the patented invention, without the owners prior permission. This exclusive right gives the opportunity to a company to gain a competitive advantage over the others. Patent Ownership A patent is granted by the national patent office of a country or a regional patent office for a group of countries. It is valid for a limited period of time, generally for 20 years from the date of filing of the patent application, provided the required maintenance fees are paid on time. A patent is a territorial right, limited to the geographical boundary of the relevant country or region. In return for the exclusive right provided by a patent, the applicant is required to disclose the invention to the public by providing a detailed, accurate and complete written description of the invention in the patent application. The granted patent and, in many countries, the patent application is made public via publication in an official journal or gazette. In order to be patentable, a invention should: consist of patentable subject matter. Discoveries and scientific theories, aesthetic creations, inventions that may affect public order, good morals or public health, computer programs may be excluded from patentability. be new. An invention is new or novel if it does not form part of the prior art. Prior art refers to all the relevant technical knowledge available to the public anywhere in the world prior to the first filing date of the relevant patent application (inter alia, patents, patent applications and non-patent literature of all kinds). involve an inventive step. An invention involves an inventive step when, taking into account the prior art, the invention would not have been obvious to a person skilled in the particular field of technology. be capable of industrial application. The term industrial refers here to the broadest sense as anything distinct from purely intellectual or aesthetic activity, and includes, for example, agriculture. In some countries, instead of industrial applicability, the criterion is utility. The utility requirement has become particularly important for patents on genetic sequences for which a utility may not yet be known at the time of filing the application. be disclosed in a clear and complete manner in the patent application. In some countries, patent law requires that the inventor discloses the best mode for practicing the invention. For instance, patents involving microorganisms, many countries require the microorganism to be deposited at a recognized depositary institution (WIPO 2006).

Actually, a patent does not enable the owner to exploit the invention but grants the owner the right to exclude others from commercially using it. The difference in these two meanings is obvious in case that two or more patents overlap and the owner of a patent needs to obtain a license so as to use an already patented invention and commercialize his/her own. The person who conceived the invention is the inventor, whereas the person or the company that files the patent application is the applicant, holder or owner of the patent. While in some cases the inventor may also be the applicant, the two are often different entities. To take a patented invention to market, a company can:

commercialise the patented invention directly, sell the patent to someone else, license the patent to others (exclusive, sole, non-exclusive license), establish a joint venture or other, strategic alliance with others having complementary assets (WIPO 2006).

Industrial Designs An industrial design is the ornamental or aesthetic aspect of an article. The design may consist of three-dimensional features, such as the shape or surface of an article, or of two-dimensional features, such as patterns, lines or colour. Industrial designs are applied to a wide variety of products of industry and handicraft: technical and medical instruments, accessories and other luxury items; housewares and electrical appliances, vehicles and architectural structures, textile designs, leisure goods. Industrial designs making an article attractive and appealing add to the commercial value of a product and increase its marketability. To be protected under most national laws, an industrial design must be primarily of an aesthetic nature, and not protect any technical features of the article to which it is applied. A registered industrial design enables the owner to protect its investment against copying or imitation of the design by third parties. In a macro level of analysis, this helps the creativity in the industrial and manufacturing sectors and the national competitiveness. In order to be registrable, a design must be "new" or "original", which means that no identical or very similar design should be known to have existed before. Once a design is registered, a registration certificate is issued. The term of protection is generally 5 years, with the possibility of further periods of renewal up to, in most cases, 15 years. Depending on the particular national law and the kind of design, an industrial design may also be protected as a work of art under copyright law. Under certain circumstances an industrial design may also be protectable under unfair competition law, although the conditions of protection and the rights and remedies ensured can be significantly different. Under the Hague Agreement Concerning the International Deposit of Industrial Designs, a WIPOadministered treaty, a procedure for an international registration is offered. An applicant can file a single international deposit either with WIPO or the national office of a country which is party to the treaty. The design will be then protected in as many member countries of the treaty as the applicant wishes (http://www.wipo.int/designs/en/designs.html). Trade Secrets In a broad sense, any confidential business information which provides an enterprise a competitive edge may be considered a trade secret. Trade secrets encompass manufacturing or industrial secrets and commercial secrets. The unauthorized use of such information by persons other than the holder is regarded as an unfair practice and a violation of the trade secret. Depending on the legal system, the protection of trade secrets forms part of the general concept of protection against unfair competition or is based on specific provisions or case law on the protection of confidential information. Although some inventions may fulfil the patentability criteria, in some cases they can only be protected as trade secrets (e.g. customer lists or manufacturing processes that are not sufficiently inventive to be granted a patent). Some advantages of trade secrets include: i. While patents last in general for up to 20 years, trade secret protection has the advantage of not being limited in time. It may therefore continue indefinitely as long as the secret is not revealed to the public.

ii. Trade secrets involve no registration costs (though there may be high costs related to keeping the information confidential). iii. Trade secrets have immediate effect. iv. Trade secret protection does not require compliance with formalities such as disclosure of the information to a Government authority. There are, however, some concrete disadvantages of protecting confidential business information as a trade secret, especially when the information meets the criteria for patentability: i. If the secret is embodied in an innovative product, others may be able to inspect it, dissect it and analyze it (i.e. "reverse engineer" it) and discover the secret and be thereafter entitled to use it. Trade secret protection of an invention in fact does not provide the exclusive right to exclude third parties from making commercial use of it. Only patents and utility models can provide this type of protection. ii. Once the secret is made public, anyone may have access to it and use it at will. iii. A trade secret is more difficult to enforce than a patent. The level of protection granted to trade secrets varies significantly from country to country, but is generally considered weak, particularly when compared with the protection granted by a patent. iv. A trade secret may be patented by someone else who developed the relevant information by legitimate means (http://www.wipo.int/sme/en/ip_business/trade_secrets/trade_secrets.htm) Copyright Copyright relates to artistic creations such as books, music, paintings and sculptures, films and technology-based works such as computer programs and electronic databases. Copyright relates to artistic creations, such as books, music, paintings and sculptures, films and technology-based works such as computer programs and electronic databases. Unlike protection of inventions, copyright law protects only the form of expression of ideas, not the ideas themselves. So, copyright law protects the owner against those who copy or otherwise take and use the form in which the original work was expressed by the author (words, musical notes, colors and shapes). Since the legal protection of literary and artistic works under copyright prevents only unauthorized use of the expressions of ideas, the duration of protection can be much longer than in the case of the protection of ideas themselves, without damage to the public interest. Moreover, the law may state that the author of an original work has the right to prevent other persons from copying or otherwise using his work. So, a created work is considered protected as soon as it exists, and a public register of copyright protected works is not necessary (http://www.wipo.int/freepublications/en/intproperty/909/wipo_pub_909.pdf).

The Fourth Community Innovation Survey

(CIS IV) THE HARMONISED SURVEY QUESTIONNAIRE

The Fourth Community Innovation Survey

(Final Version: October 20 2004)

This survey collects information about product and process innovation as well as organisational and marketing innovation during the three-year period 2002 to 2004 inclusive. Most questions cover new or significantly improved goods or services or the implementation of new or significantly improved processes, logistics or distribution methods. Organisational and marketing innovations are only covered in section 10. In order to be able to compare enterprises with and without innovation activities, we request all enterprises to respond to all questions, unless otherwise instructed.
Person we should contact if there are any queries regarding the form:

Name: Job title: Organisation: Phone: Fax: E-mail:

_____________________________________ _____________________________________ _____________________________________ _____________________________________ _____________________________________ _____________________________________

General information about the enterprise Name of enterprise Address1 Postal code

Main activity2

1.1 Is your enterprise part of an enterprise group? (A group consists of two or more legally defined enterprises
under common ownership. Each enterprise in the group may serve different markets, as with national or regional subsidiaries, or serve different product markets. The head office is also part of an enterprise group.) Yes No

In which country is the head office of your group located? 3______________________

If your enterprise is part of an enterprise group, please answer all further questions only for your enterprise in [your country]. Do not include results for subsidiaries or parent enterprises outside of [your country]

1.2 In which geographic markets did your enterprise sell goods or services during the three years 2002 to 2004? Yes Local / regional within [your country] National Other European Union (EU) countries, EFTA, or EU candidate countries* All other countries
*: Include the following countries: Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Italy, Ireland, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Slovenia, Slovakia, Switzerland, Turkey, Spain, Sweden and the United Kingdom.

No

1 NUTS 2 code 2 NACE 4 digit code 3Country code according to ISO standard 2

2.

Product (good or service) innovation

A product innovation is the market introduction of a new good or service or a significantly improved good or service with respect to its capabilities, such as improved software, user friendliness, components or sub-systems. The innovation (new or improved) must be new to your enterprise, but it does not need to be new to your sector or market. It does not matter if the innovation was originally developed by your enterprise or by other enterprises.
2.1 During the three years 2002 to 2004, did your enterprise introduce: Yes New or significantly improved goods. (Exclude the simple resale of new goods purchased from other enterprises and changes of a solely aesthetic nature.) New or significantly improved services. If no to both options, go to question 3.1, otherwise: 2.2 Who developed these product innovations? Select the most appropriate option only Mainly your enterprise or enterprise group Your enterprise together with other enterprises or institutions Mainly other enterprises or institutions No

2.3 Were any of your goods and service innovations during the three years 2002 to 2004:
Yes No

New to your market? Only new to your firm?

Your enterprise introduced a new or significantly improved good or service onto your market before your competitors (it may have already been available in other markets) Your enterprise introduced a new or significantly improved good or service that was already available from your competitors in your market

Using the definitions above, please give the percentage of your total turnover4 in 2004 from: Goods and service innovations introduced during 2002 to 2004 that were new to your market Goods and service innovations introduced during 2002 to 2004 that were only new to your firm % Goods and services that were unchanged or only marginally modified during 2002 to 2004 (include the resale of new goods or services purchased from other enterprises) Total turnover in 2004

% 1 0 0 %

4 For Credit institutions: Interests receivable and similar income, for insurance services: Gross premiums written 3

3. Process innovation A process innovation is the implementation of a new or significantly improved production process, distribution method, or support activity for your goods or services. The innovation (new or improved) must be new to your enterprise, but it does not need to be new to your sector or market. It does not matter if the innovation was originally developed by your enterprise or by other enterprises. Exclude purely organisational innovations. 3.1 During the three years 2002 to 2004, did your enterprise introduce:
Yes New or significantly improved methods of manufacturing or producing goods or services New or significantly improved logistics, delivery or distribution methods for your inputs, goods or services New or significantly improved supporting activities for your processes, such as maintenance systems or operations for purchasing, accounting, or computing If no to all options, go to section 4, otherwise: 3.2 Who developed these process innovations? Select the most appropriate option only Mainly your enterprise or enterprise group Your enterprise together with other enterprises or institutions Mainly other enterprises or institutions No

4. Ongoing or abandoned innovation activities Innovation activities include the acquisition of machinery, equipment, software, and licenses; engineering and development work, training, marketing and R&D when they are specifically undertaken to develop and/or implement a product or process innovation.
4.1 Did your enterprise have any innovation activities to develop product or process innovations that were abandoned during 2002 to 2004 or still ongoing by the end of 2004? Yes No

If your enterprise had no product or process innovations or innovation activity during 2002 to 2004 (no to all options in questions 2.1, 3.1, and 4.1), go to question 8.2. Otherwise, go to question 5.1

5. Innovation activities and expenditures

5.1 During the three years 2002 to 2004, did your enterprise engage in the following innovation activities: Yes No Intramural (in-house) R&D Creative work undertaken within your enterprise to increase the stock of knowledge and its use to devise new and improved products and processes (including software development) If yes, did your firm perform R&D during 2002 to 2004: Continuously? Occasionally? Same activities as above, but performed by other companies (including other enterprises within your group) or by public or private research organisations and purchased by your enterprise Acquisition of advanced machinery, equipment and computer hardware or software to produce new or significantly improved products and processes Purchase or licensing of patents and non-patented inventions, know-how, and other types of knowledge from other enterprises or organisations Internal or external training for your personnel specifically for the development and/or introduction of new or significantly improved products and processes Activities for the market introduction of your new or significantly improved goods and services, including market research and launch advertising Procedures and technical preparations to implement new or significantly improved products and processes that are not covered elsewhere.

Extramural R&D

Acquisition of machinery, equipment and software Acquisition of other external knowledge Training

Market introduction of innovations Other preparations

5.2

Please estimate the amount of expenditure for each of the following four innovation activities in 2004 only. (Include personnel and related costs)5
Tick nil if your enterprise had no expenditures in 2004 Nil

Intramural (in-house) R&D (Include capital expenditures on buildings and equipment specifically for R&D) Acquisition of R&D (extramural R&D) Acquisition of machinery, equipment and software (Exclude expenditures on equipment for R&D) Acquisition of other external knowledge

Total of these four innovation expenditure categories

5 Give expenditure data in national currency units. 5

5.3 During the three years 2002 to 2004, did your enterprise receive any public financial support for innovation activities from the following levels of government? Include financial support via tax credits or deductions, grants, subsidised loans, and loan guarantees. Exclude research and other innovation activities conducted entirely for the public sector under contract. Yes Local or regional authorities Central government (including central government agencies or ministries) The European Union (EU) If yes, did your firm participate in the EUs 5th (1998-2002) or 6th (2003-2006) Framework Programme for Research and Technical Development No

6. Sources of information and co-operation for innovation activities

6.1 During the three years 2002 to 2004, how important to your enterprises innovation activities were each of the following information sources? Please identify information sources that
provided information for new innovation projects or contributed to the completion of existing innovation projects.

Degree of importance
Tick not used if no information was obtained from a source.

Information source Internal Market sources Within your enterprise or enterprise group Suppliers of equipment, materials, components, or software Clients or customers Competitors or other enterprises in your sector Consultants, commercial labs, or private R&D institutes Institutional sources Other sources Universities or other higher education institutions Government or public research institutes Conferences, trade fairs, exhibitions Scientific journals and trade/technical publications Professional and industry associations

High

Medium

Low

Not used

6.2 During the three years 2002 to 2004, did your enterprise co-operate on any of your innovation activities with other enterprises or institutions? Innovation co-operation is active participation with other enterprises or non-commercial institutions on innovation activities. Both partners do not need to commercially benefit. Exclude pure contracting out of work with no active co-operation. Yes No (Please go to question 7.1)

6.3 Please indicate the type of co-operation partner and location

Type of co-operation partner [Your country]

(Tick all that apply) Other Europe* United States All other countries

A. Other enterprises within your enterprise group B. Suppliers of equipment, materials, components, or software C. Clients or customers D. Competitors or other enterprises in your sector E. Consultants, commercial labs, or private R&D institutes F. Universities or other higher education institutions G. Government or public research institutes
*: Include the following European Union (EU) countries, EFTA, or EU candidate countries: Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Italy, Ireland, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Slovenia, Slovakia, Switzerland, Turkey, Spain, Sweden and the United Kingdom.

6.4 Which type of co-operation partner did you find the most valuable for your enterprises innovation activities? (Give corresponding letter) _______

7. Effects of innovation during 2002-2004

7.1 How important were each of the following effects of your product (good or service) and process innovations introduced during the three years 2002 to 2004? Degree of observed effect Medium Low Not relevant

High
Product oriented effects

Increased range of goods or services Entered new markets or increased market share Improved quality of goods or services Improved flexibility of production or service provision

Process oriented effects

Increased capacity of production or service provision Reduced labour costs per unit output Reduced materials and energy per unit output

Other effects

Reduced environmental impacts or improved health and safety Met regulatory requirements

8. Factors hampering innovation activities

8.1 During the three years 2002 to 2004, were any of your innovation activities or projects: Yes Abandoned in the concept stage Abandoned after the activity or project was begun Seriously delayed No

TO BE ANSWERED BY ALL ENTERPRISES: 8.2 During the three years 2002 to 2004, how important were the following factors for hampering your innovation activities or projects or influencing a decision not to innovate? Degree of importance
High Cost factors Medium Low Factor not experienced

Lack of funds within your enterprise or group Lack of finance from sources outside your enterprise Innovation costs too high Lack of qualified personnel Lack of information on technology Lack of information on markets Difficulty in finding cooperation partners for innovation Market dominated by established enterprises Uncertain demand for innovative goods or services No need due to prior innovations No need because of no demand for innovations

Knowledge factors

Market factors Reasons not to innovate

9. Intellectual property rights

9.1 During the three years 2002 to 2004, did your enterprise: Yes Apply for a patent Register an industrial design Register a trademark Claim copyright No

10. Organisational and marketing innovations An organisational innovation is the implementation of new or significant changes in firm structure or management methods that are intended to improve your firms use of knowledge, the quality of your goods and services, or the efficiency of work flows. A marketing innovation is the implementation of new or significantly improved designs or sales methods to increase the appeal of your goods and services or to enter new markets.
10.1 During the three years 2002 to 2004, did your enterprise introduce: Yes Organisational innovations New or significantly improved knowledge management systems to better use or exchange information, knowledge and skills within your enterprise A major change to the organisation of work within your enterprise, such as changes in the management structure or integrating different departments or activities New or significant changes in your relations with other firms or public institutions, such as through alliances, partnerships, outsourcing or sub-contracting Significant changes to the design or packaging of a good or service (Exclude routine/ seasonal changes such as clothing fashions) New or significantly changed sales or distribution methods, such as internet sales, franchising, direct sales or distribution licenses. No

Marketing innovations

10.2 If your enterprise introduced an organisational innovation during the three years 2002 to 2004, how important were each of the following effects? Degree of observed effect Medium Low Not relevant

High Reduced time to respond to customer or supplier needs Improved quality of your goods or services Reduced costs per unit output Improved employee satisfaction and/or reduced rates of employee turnover

11. Basic economic information on your enterprise 11.1 What was your enterprises total turnover for 2002 and 2004?6 Turnover is defined as the market sales
of goods and services (Include all taxes except VAT7). 2002 2004

11.2 What was your enterprises total number of employees in 2002 and 2004?8
2002 2004

6 Give turnover in 000 of national currency units. 7 For Credit institutions: Interests receivable and similar income; for Insurance services: Gross premiums written 8 Annual average. If not available, give the number of employees at the end of each year. 9

The Community Innovation Survey 2006

(CIS 2006) THE HARMONISED SURVEY QUESTIONNAIRE

The Community Innovation Survey 2006

(Final Version: August 30 2006)

This survey collects information about product and process innovation as well as organisational and marketing innovation during the three-year period 2004 to 2006 inclusive. Most questions cover new or significantly improved goods or services or the implementation of new or significantly improved processes, logistics or distribution methods. Organisational and marketing innovations are only covered in section 10. In order to be able to compare enterprises with and without innovation activities, we request all enterprises to respond to all questions, unless otherwise instructed.
Person we should contact if there are any queries regarding the form:

Name: Job title: Organisation: Phone: Fax: E-mail:

_____________________________________ _____________________________________ _____________________________________ _____________________________________ _____________________________________ _____________________________________

General information about the enterprise Name of enterprise Address1 Postal code

Main activity2

1.1 Is your enterprise part of an enterprise group? (A group consists of two or more legally defined enterprises
under common ownership. Each enterprise in the group may serve different markets, as with national or regional subsidiaries, or serve different product markets. The head office is also part of an enterprise group.) Yes No

In which country is the head office of your group located? 3______________________

If your enterprise is part of an enterprise group, please answer all further questions only for your enterprise in [your country]. Do not include results for subsidiaries or parent enterprises outside of [your country]

1.2 In which geographic markets did your enterprise sell goods or services during the three years 2004 to 2006? Yes Local / regional within [your country] National Other European Union (EU) countries, EFTA, or EU candidate countries* All other countries
*: Include the following countries: Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Italy, Ireland, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Slovenia, Slovakia, Switzerland, Turkey, Spain, Sweden and the United Kingdom.

No

1 NUTS 2 code 2 NACE 4 digit code 3Country code according to ISO standard 2

2.

Product (good or service) innovation

A product innovation is the market introduction of a new good or service or a significantly improved good or service with respect to its capabilities, such as improved software, user friendliness, components or sub-systems. The innovation (new or improved) must be new to your enterprise, but it does not need to be new to your sector or market. It does not matter if the innovation was originally developed by your enterprise or by other enterprises.
2.1 During the three years 2004 to 2006, did your enterprise introduce: Yes New or significantly improved goods. (Exclude the simple resale of new goods purchased from other enterprises and changes of a solely aesthetic nature.) New or significantly improved services. If no to both options, go to question 3.1, otherwise: 2.2 Who developed these product innovations? Select the most appropriate option only Mainly your enterprise or enterprise group Your enterprise together with other enterprises or institutions Mainly other enterprises or institutions No

2.3 Were any of your goods and service innovations during the three years 2004 to 2006:
Yes No

New to your market? Only new to your firm?

Your enterprise introduced a new or significantly improved good or service onto your market before your competitors (it may have already been available in other markets) Your enterprise introduced a new or significantly improved good or service that was already available from your competitors in your market

Using the definitions above, please give the percentage of your total turnover4 in 2006 from: Goods and service innovations introduced during 2004 to 2006 that were new to your market Goods and service innovations introduced during 2004 to 2006 that were only new to your firm % Goods and services that were unchanged or only marginally modified during 2004 to 2006 (include the resale of new goods or services purchased from other enterprises) Total turnover in 2006

% 1 0 0 %

4 For Credit institutions: Interests receivable and similar income, for insurance services: Gross premiums written 3

3. Process innovation A process innovation is the implementation of a new or significantly improved production process, distribution method, or support activity for your goods or services. The innovation (new or improved) must be new to your enterprise, but it does not need to be new to your sector or market. It does not matter if the innovation was originally developed by your enterprise or by other enterprises. Exclude purely organisational innovations. 3.1 During the three years 2004 to 2006, did your enterprise introduce:
Yes New or significantly improved methods of manufacturing or producing goods or services New or significantly improved logistics, delivery or distribution methods for your inputs, goods or services New or significantly improved supporting activities for your processes, such as maintenance systems or operations for purchasing, accounting, or computing If no to all options, go to section 4, otherwise: 3.2 Who developed these process innovations? Select the most appropriate option only Mainly your enterprise or enterprise group Your enterprise together with other enterprises or institutions Mainly other enterprises or institutions No

4. Ongoing or abandoned innovation activities Innovation activities include the acquisition of machinery, equipment, software, and licenses; engineering and development work, training, marketing and R&D5 when they are specifically undertaken to develop and/or implement a product or process innovation.
4.1 Did your enterprise have any innovation activities to develop product or process innovations that were abandoned during 2004 to 2006 or still ongoing by the end of 2006? Yes No

If your enterprise had no product or process innovations or innovation activity during 2004 to 2006 (no to all options in questions 2.1, 3.1, and 4.1), go to question 8.2. Otherwise, go to question 5.1

5 Include basic R&D as an innovation activity even if not specifically related to a product and/or process innovation 4

5. Innovation activities and expenditures

5.1 During the three years 2004 to 2006, did your enterprise engage in the following innovation activities: Yes No Intramural (in-house) R&D Creative work undertaken within your enterprise to increase the stock of knowledge and its use to devise new and improved products and processes (including software development) If yes, did your firm perform R&D during 2004 to 2006: Continuously? Occasionally? Same activities as above, but performed by other companies (including other enterprises within your group) or by public or private research organisations and purchased by your enterprise Acquisition of advanced machinery, equipment and computer hardware or software to produce new or significantly improved products and processes Purchase or licensing of patents and non-patented inventions, know-how, and other types of knowledge from other enterprises or organisations Internal or external training for your personnel specifically for the development and/or introduction of new or significantly improved products and processes Activities for the market introduction of your new or significantly improved goods and services, including market research and launch advertising Procedures and technical preparations to implement new or significantly improved products and processes that are not covered elsewhere.

Extramural R&D

Acquisition of machinery, equipment and software Acquisition of other external knowledge Training

Market introduction of innovations Other preparations

5.2

Please estimate the amount of expenditure for each of the following four innovation activities in 2006 only. (Include personnel and related costs)6
If your enterprise had no expenditures in 2006 please fill-in 0

Intramural (in-house) R&D (Include capital expenditures on buildings and equipment specifically for R&D) Acquisition of R&D (extramural R&D) Acquisition of machinery, equipment and software (Exclude expenditures on equipment for R&D) Acquisition of other external knowledge

Total of these four innovation expenditure categories

6 Give expenditure data in 000s of national currency units to eight digits. 5

5.3 During the three years 2004 to 2006, did your enterprise receive any public financial support for innovation activities from the following levels of government? Include financial support via tax credits or deductions, grants, subsidised loans, and loan guarantees. Exclude research and other innovation activities conducted entirely for the public sector under contract. Yes Local or regional authorities Central government (including central government agencies or ministries) The European Union (EU) If yes, did your firm participate in the EU 6th Framework Programme for Research and Technical Development (2003-2006) No

6. Sources of information and co-operation for innovation activities

6.1 During the three years 2004 to 2006, how important to your enterprises innovation activities were each of the following information sources? Please identify information sources that
provided information for new innovation projects or contributed to the completion of existing innovation projects.

Degree of importance
Tick not used if no information was obtained from a source.

Information source Internal Market sources Within your enterprise or enterprise group Suppliers of equipment, materials, components, or software Clients or customers Competitors or other enterprises in your sector Consultants, commercial labs, or private R&D institutes Institutional sources Other sources Universities or other higher education institutions Government or public research institutes Conferences, trade fairs, exhibitions Scientific journals and trade/technical publications Professional and industry associations

High

Medium

Low

Not used

6.2 During the three years 2004 to 2006, did your enterprise co-operate on any of your innovation activities with other enterprises or institutions? Innovation co-operation is active participation with other enterprises or non-commercial institutions on innovation activities. Both partners do not need to commercially benefit. Exclude pure contracting out of work with no active co-operation. Yes No (Please go to question 7.1)

6.3 Please indicate the type of co-operation partner and location

Type of co-operation partner [Your country]

(Tick all that apply) Other Europe* United States All other countries

A. Other enterprises within your enterprise group B. Suppliers of equipment, materials, components, or software C. Clients or customers D. Competitors or other enterprises in your sector E. Consultants, commercial labs, or private R&D institutes F. Universities or other higher education institutions G. Government or public research institutes
*: Include the following European Union (EU) countries, EFTA, or EU candidate countries: Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Italy, Ireland, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Slovenia, Slovakia, Switzerland, Turkey, Spain, Sweden and the United Kingdom.

6.4 Which type of co-operation partner did you find the most valuable for your enterprises innovation activities? (Give corresponding letter) _______

7. Effects of innovation during 2004-2006

7.1 How important were each of the following effects of your product (good or service) and process innovations introduced during the three years 2004 to 2006? Degree of observed effect Medium Low Not relevant

High
Product oriented effects

Increased range of goods or services Entered new markets or increased market share Improved quality of goods or services Improved flexibility of production or service provision

Process oriented effects

Increased capacity of production or service provision Reduced labour costs per unit output Reduced materials and energy per unit output

Other effects

Reduced environmental impacts or improved health and safety Met regulatory requirements

8. Factors hampering innovation activities

8.1 During the three years 2004 to 2006 were any of your innovation activities or projects: Yes Abandoned in the concept stage Abandoned after the activity or project was begun Seriously delayed No

TO BE ANSWERED BY ALL ENTERPRISES: 8.2 During the three years 2004 to 2006, how important were the following factors for hampering your innovation activities or projects or influencing a decision not to innovate? Degree of importance
High Cost factors Medium Low Factor not experienced

Lack of funds within your enterprise or group Lack of finance from sources outside your enterprise Innovation costs too high Lack of qualified personnel Lack of information on technology Lack of information on markets Difficulty in finding cooperation partners for innovation Market dominated by established enterprises Uncertain demand for innovative goods or services No need due to prior innovations No need because of no demand for innovations

Knowledge factors

Market factors Reasons not to innovate

9. Intellectual property rights

9.1 During the three years 2004 to 2006, did your enterprise: Yes Apply for a patent Register an industrial design Register a trademark Claim copyright No

10. Organisational and marketing innovations An organisational innovation is the implementation of new or significant changes in firm structure or management methods that are intended to improve your firms use of knowledge, the quality of your goods and services, or the efficiency of work flows. A marketing innovation is the implementation of new or significantly improved designs or sales methods to increase the appeal of your goods and services or to enter new markets.
10.1 During the three years 2004 to 2006, did your enterprise introduce: Yes Organisational innovations New or significantly improved knowledge management systems to better use or exchange information, knowledge and skills within your enterprise A major change to the organisation of work within your enterprise, such as changes in the management structure or integrating different departments or activities New or significant changes in your relations with other firms or public institutions, such as through alliances, partnerships, outsourcing or sub-contracting Significant changes to the design or packaging of a good or service (Exclude routine/ seasonal changes such as clothing fashions) New or significantly changed sales or distribution methods, such as internet sales, franchising, direct sales or distribution licenses. No

Marketing innovations

10.2 If your enterprise introduced an organisational innovation during the three years 2004 to 2006, how important were each of the following effects? Degree of observed effect Medium Low Not relevant

High Reduced time to respond to customer or supplier needs Improved quality of your goods or services Reduced costs per unit output Improved employee satisfaction and/or reduced rates of employee turnover

11. Basic economic information on your enterprise 11.1 What was your enterprises total turnover for 2004 and 2006?7 Turnover is defined as the market sales
of goods and services (Include all taxes except VAT8). 2004 2006

11.2 What was your enterprises total number of employees in 2004 and 2006?9
2004 2006

7 Give turnover in 000 of national currency units to nine digits. 8 For Credit institutions: Interests receivable and similar income; for Insurance services: Gross premiums written 9 Annual average. If not available, give the number of employees at the end of each year. Give figures to six digits. 9