Measuring and Examining Innovation in Philippine Business and Industry

Abstract

Innovation involves implementing new or significantly improved goods and services, production processes, marketing, or organizational methods for adding value. The measurement of innovation provides a mechanism for benchmarking national performance, as well as allows a better understanding of its relation to economic growth. Further, examining determinants and bottlenecks to innovation among firms provides inputs to mainstreaming of policies on innovation. In this paper, results of the 2015 Survey of Innovation Activities (SIA), conducted by the Philippine Institute for Development Studies (PIDS), are described and discussed. Survey results suggest that less than half of the firms in the country were innovators, with larger-sized firms innovating more than the micro, small, and medium establishments (MSMEs). The most common innovative behaviour among firms was process innovation. Effects of innovation were observed to be largely customer-driven. Firms identified cost factors as the most important barrier to innovation. Knowledge and cooperation networks for innovation need strengthening. Government support and its role on innovation was also limited. Firms hardly accessed technical assistance from the government and research institutions. Similarly, firms have limited cooperation with the academe in terms of innovation activities. Firms cooperated more internally with establishments within their enterprise, their customers, and suppliers for their innovation activities. Given these issues, the government needs to have a champion for developing stronger policies and interventions to support and encourage innovation. It is also important to improve information dissemination regarding public programs available to assist firms to pursue innovation. Networking, linkages, and collaboration among the government, industry associations, and universities and research institutions also require further enhancement.