14 - Measuring innovation performance

Summary

Introduction

Patents and patent citations are increasingly used as measures of innovation performance (e.g. Katila, 2002). However, confusion exists over the applicability of these measures and over the appropriate patent citation lag to be used. This chapter examines the measurement of innovation performance through patents, focusing especially on how to measure the radicality of innovations by using patent data.

The existing literature provides a wide array of definitions of “radical” innovations. In this contribution I propose that the previous definitions of radicality can be arranged into four broad categories – industry-, organization-, user- and technologically radical – each addressing a different dimension of radicality (see table 14.1). The first category of radical innovations defines “radical” as new or disruptive to the industry. Radical new products at the level of the industry dominate and make obsolete the previous products in established markets, can give rise to new industrial sectors (Achilladelis, Schwarzkopf and Cenes, 1990) and affect the market power relations in the industry (Henderson, 1993).

The second category of radical innovations defines radical as new to the organization. Organizationally radical innovation may be defined as innovation that incorporates, for example, a technology that is new to the firm but may be well understood by others (Green, Gavin and Aiman-Smith, 1995). Organizational radicality has also been described as a degree of change the innovation makes in the existing practices of the organization. The third category defines radical as new to the users.