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User Innovation in SMEs: Incidence and Transfer to Producers

  • Jeroen de Jong
  • Eric von Hippel
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    The contribution of this paper is threefold. Firstly, we measure the incidence of user innovation in a broad sample of firms. Previous work has collected repeated evidence on the frequency of user innovation in a variety of industries and products, but so far its incidence has not been demonstrated in samples of larger business populations. Secondly, we assess if current innovation surveys adequately capture user innovation. Surveys such as the CIS (Community Innovation Survey) take a producer perspective and seem to overlook that in practice many innovation efforts are done by users to satisfy their process needs. Thirdly, we explore to what extent user innovations are transferred to producer firms. In doing so we assess if user innovation is marked by voluntary spillovers which is a strong argument to justify policies for user innovation. Drawing on survey data of 2 416 SMEs in the Netherlands, we find that 21% of all SMEs engage in user innovation, i.e. they develop and/or significantly modify existing techniques, equipment or software to satisfy their own process-related needs. We also find that user innovation is remains largely invisible in the current innovation surveys. Next, in a survey of technology-based small firms in the Netherlands we identified 364 specific user innovations. We found that users tend not to patent or protect their innovations, and that one out of four is transferred to producers. The data suggest a significant feedstock of voluntary knowledge spillovers from users to producer firms. We conclude that future innovation surveys should explicitly capture user innovation, and develop some recommendations to guide this effort. We also plea for more research on policies for user innovation.

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    File URL: http://www.entrepreneurship-sme.eu/pdf-ez/H200814.pdf
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    Paper provided by EIM Business and Policy Research in its series Scales Research Reports with number H200814.

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    Length: 38 pages
    Date of creation: 21 Oct 2008
    Date of revision:
    Handle: RePEc:eim:papers:h200814
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    1. Harhoff, Dietmar & Henkel, Joachim & von Hippel, Eric, 2003. "Profiting from voluntary information spillovers: how users benefit by freely revealing their innovations," Research Policy, Elsevier, vol. 32(10), pages 1753-1769, December.
    2. Mansfield, Edwin, 1985. "How Rapidly Does New Industrial Technology Leak Out?," Journal of Industrial Economics, Wiley Blackwell, vol. 34(2), pages 217-23, December.
    3. Glen L. Urban & Eric von Hippel, 1988. "Lead User Analyses for the Development of New Industrial Products," Management Science, INFORMS, vol. 34(5), pages 569-582, May.
    4. Alessandro Nuvolari, 2004. "Collective invention during the British Industrial Revolution: the case of the Cornish pumping engine," Cambridge Journal of Economics, Oxford University Press, vol. 28(3), pages 347-363, May.
    5. Franke, Nikolaus & Shah, Sonali, 2003. "How communities support innovative activities: an exploration of assistance and sharing among end-users," Research Policy, Elsevier, vol. 32(1), pages 157-178, January.
    6. Jensen, Morten Berg & Johnson, Bjorn & Lorenz, Edward & Lundvall, Bengt Ake, 2007. "Forms of knowledge and modes of innovation," Research Policy, Elsevier, vol. 36(5), pages 680-693, June.
    7. Grinstein, Amir & Goldman, Arieh, 2006. "Characterizing the technology firm: An exploratory study," Research Policy, Elsevier, vol. 35(1), pages 121-143, February.
    8. Allen, Robert C., 1983. "Collective invention," Journal of Economic Behavior & Organization, Elsevier, vol. 4(1), pages 1-24, March.
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