Measuring Innovation: Metric Selection and Unintended Consequences

November 24, 2016.
The Evidence Network’s VP of Research Dr. Margaret Dalziel provided comments to the Financial Post regarding the World Intellectual Property Organization’s report that China has surpassed one million patent applications in one year, the first country to ever do so. But high numbers of patents don’t necessarily indicate that valuable innovation is occurring...

Measuring Innovation: Metric Selection and Unintended Consequences

The Evidence Network’s VP of Research Dr. Margaret Dalziel provided comments to the Financial Post regarding the World Intellectual Property Organization’s report that China has surpassed one million patent applications in one year, the first country to ever do so. But high numbers of patents don’t necessarily indicate that valuable innovation is occurring:

China’s strong growth numbers, however, don’t necessarily signal a wealth of valuable innovation, says Margaret Dalziel, associate professor at the Conrad Business, Entrepreneurship and Technology Centre at the University of Waterloo.

In theory, if these breakthroughs were commercially valuable, Chinese innovators would be filing patents in the U.S., Europe and other major markets, she said.

Of those one-million-plus patent applications, only 4 per cent were filed abroad, WIPO said in the report. By comparison, filings abroad comprise roughly 45 per cent of applications from Japan and the U.S.

“The Chinese government declared that they will become more innovative, and they will measure this through patents,” said Dalziel. “So there’s a real push to patent in China. But if you’ve got an invention in China that’s really valuable, well, you’re going to patent it in the United States and Europe too. And that’s not happening.”

The article also touched on Canadian innovation support programs, and how policymakers can best facilitate growth and innovation:

In Canada, there is room for improvement of government policies to support young companies and innovation, Dalziel added. Compared to other countries, Canada is over-invested in research-and-development tax credits, which have a marginal positive effect, if any.

“We don’t need a marginal effect, we need transformational programs that really help companies become more innovative,” she said.

On the other hand, many of Canada’s newest companies and startups are in fields such as software, where research and development and initial capital costs are lower and patent applications aren’t as relevant, Dalziel added.

“You’ve got a policy like tax credits that might have a 1 or 2 per cent effect,” she said. “Meanwhile, the new companies are a totally different type of company than the new companies of just 10 years ago.”

About The Evidence Network Inc.

The Evidence Network Inc. is a global leader in providing impact assessments for innovation enablers supporting companies, entrepreneurs, innovation, and research. Follow us on Twitter, and learn more about how we measure the impact of business incubators and accelerators.