industries; these goods may enable the purchas- 

 ing industries to increase their productivity, 

 improve the quality of their products, or develop 

 new and improved products and services for 

 their own markets. The computer is one of the 

 most obvious examples of an innovation from 

 the first group of industries which is used 

 extensively by other industries. 



In addition to its importance at the firm and 

 industry levels, technological innovation is 

 acknowledged as a prime source of the Nation's 

 economic progress, contributing to productivity 

 and economic growth.-'* The capability for such 

 innovation, moreover, is regarded as a major 

 comparative advantage which the United States 

 has in international relations — political, military, 

 and economic.-" 



The present indicators focus on major 

 technological innovations. The vast majority of 

 innovation efforts, however, seek or attain 

 modest improvements in products and 

 processes, rather than major advances. The 

 results of these efforts are not captured by 

 present measures even though the cumulative 

 impact of the more numerous minor advances 

 may often exceed that of major innovations. -to 

 Furthermore, no indicators are provided of the 

 extent to which the innovations replace or 

 represent advances over existing products and 

 processes. In addition to these limitations, the 

 indicators do not specify the economic and social 

 benefits — and costs — associated with the in- 

 novations. 



Indicators of trends in innovation presented in 

 this section are based, for the most part, on a 

 study conducted specifically for this report. The 

 study provides information on 500 major 

 product innovations which were introduced into 

 the market during the 1953-73 period by leading 

 industrialized nations. -"i The innovations were 

 selected by an international panel of experts as 

 representing the most significant new industrial 

 products and processes, in terms of their 



-"" These aspects are discussed later in this chapter in the 

 section entitled, "Returns from R&D and Innovation" 



'" See the chapter "International Indicators of Science and 

 Technology" in this report for indicators of the role of 

 technology in international trade 



'" Jacob Schmookler, Patents. Imentwn. and Economic Change, 

 (Cambridge: Harvard University Press, 1972). 



" This information was used in devising indicators of the 

 relative innovativeness of the United States and other major 

 developed nations; these indicators are presented in an 

 earlier chapter of this report, entitled "International 

 Indicators of Science and Technology." 



technological importance and economic and 

 social impact.''- Information on a subset of these 

 innovations — a total of the 319 produced by U.S. 

 industries — was used to develop the measures of 

 innovation presented below. The innovations on 

 which the indicators are based span a wide range 

 of technologies and all major manufacturing and 

 nonmanufacturing industries. The diversity is 

 suggested by the following innovations which 

 were among those included in the study. 



Integrated circuits 

 Lasers 



Microwave transmission 

 Cortisone synthesis 

 Permanent magnetic alloys 

 Weather satellites 

 Double-knit synthetics 

 Computer time-sharing 

 Light-emitting diodes 

 Textured granular protein 



Innovation and company size. A topic of 

 enduring concern is the relationship between 

 size of firm and technological innovation. ■•-' This 

 topic was examined through the use of the major 

 innovations described above. The results are 

 shown in figure 4-14, in terms of the percentage 

 of innovations produced by companies in each of 

 five size categories. These data, which are based 

 on a total of 277 innovations, ^-i show that large 

 manufacturing companies (those with 10,000 or 

 more employees) produced the greatest propor- 

 tion of major innovations, followed by firms in 

 the two smallest size categories. Companies of 

 intermediate size (1,000-4,999 and 5,000-9,999 

 employees) accounted for the fewest in- 

 novations. The data also show that the number 

 of innovations from large companies has in- 

 creased over time, in both absolute and relative 

 terms. 



Small firms, however, are sometimes regarded 

 as those with less than 1,000 employees. By this 



J- For details of the methodology employed in the study, 

 see huiicalon ol Internatumal Trends in Technological Innovation, 

 Gellman Research Associates, Inc., 1975. (A study com- 

 missioned specifically for this report). 



^■' For a discussion of factors related to firm size which may 

 influence innovation, see Sumner Myers and Donald G. 

 Marquis, Successful Industrial Innovations, A Studu of factors 

 Underlying Innovation w Selected Firms, National Science Founda- 

 tion (NSF 69-17). 



•■^ Here, and elsewhere, the number of innovations used 

 for analysis may be less than the total 319 innovations 

 mentioned earlier because of the unavailability of specific 

 data on all the innovations, or the consideration of only those 

 originating from manufacturing industries. 



100 



