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Measuring Innovation: Approaches, Challenges and Measurement Practices

Kanika Budhiraja



Innovation has become a significant concept in present state of affairs. It has become imperative to calculate the innovation in order to handle it effectively and efficiently. However, measurement & calculation of the concept of innovation has turned out to be a difficult task. This paper basically focuses the meaning and measurement of innovation at the organisation level. Innovation has been defined as the procedure of presenting new ideas to an organisation which outcome in improved firm performance. An assortment of measures of innovative activity are analysed and evaluated. All the individual measures earlier discussed in research papers can only act as one-sided indicators of the extent of innovation. This is because of the fact that extremely broad range of activities which varies between firms is being covered under the concept of innovation. To construct efficient parameters for the measurement of innovation, it is indispensable to combine the various individual measures. The paper is organized with an aim to evaluate & conclude the concept, measurement and challenges in innovation. Innovation can be clarified as the application of new ideas to the products, processes or any other aspect of a firm’s activities. Innovation is related with the fundamental concept of commercialising or refining value from ideas; and therefore, it can be stated that this is in contradiction with ‘invention’ which is not required to be directly associated with commercialisation. As, this description of innovation may appear straightforward, a more specific definition includes the consideration of a number of issues. These issues are outlined in paper, which weigh against the definition of innovation used by the OECD, Australian government agencies and businesses. The winding up of this aspect is that, while the basic concept of innovation is relatively simple, a precise definition, appropriate to all types of firms, is not so straightforward. A particular section of the paper discusses the various methods that are available to evaluate the extent of innovation by companies. Such ways consist of the use of information from survey data, company accounts and intellectual property statistics. These ways give in a large number of prospective innovation measures or indicators which can be further served for consequent analysis. These innovation indicators can be bifurcated into the outputs of innovation and the inputs to the innovation process. Both output and input measures are beneficial for the process of concluding the overall aspect of innovation. There are various innovation indicators discussed, that has various challenges. In some cases it is possible to use econometric techniques to filter the measures of innovation. Ultimately the significance of innovation is due to its effect of the performance of the companies. Therefore, it seems suitable to attempt and link the various indicators of the extent of innovation to organisation performance. If this is made possible, it provides for a more complete measure of the value of innovative activities. On the basis of literature review, policies of the organizations, professional knowledge and analysis of data collection findings, this paper explains a larger view of challenges and best practices in measuring innovation. After having a glance at key challenges, the recommendation regarding use of an innovation control panel was presented. The panel so recommended must include a combination of evaluation parameters in all the different groupings of inputs, procedures and outcomes of novelty. The Metrics for in depth explanation of each group is detailed in chapters.


Keywords: Innovation, Measurement, Innovation Indicators, Innovation Process, Metrics, Challenges, Performance.


Cite this Article

Misbah Jahan, Mamta MohanRole of Financial Inclusion in Promoting Inclusive Growth. E-Commerce for Future & Trends. 2019; 6(2): 41–49p.

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