Innovation Is Not Only About Patents

THERE ARE 25 INDICATORS USED BY THE INNOVATION UNION SCOREBOARD TO MEASURE A COUNTRY'S LEVEL OF INNOVATION. AND FOR ITALY THERE IS GOOD NEWS COMING FROM EUROSTAT AND EPO

by Nicoletta Corrocher, Dept. of Management and Technology, Bocconi
Translated by Alex Foti

In 2015, patent applications coming from Italy have posted 9% record growth with respect to the previous year, leading the country to the 18th place worldwide in terms of patent applications per capita. This is shown by the latest data coming from EPO, the European Patent Office, which received 3,979 patent applications from Italy, 33% of which were from Lombardy. The main sectors affected by innovation are information technology, digital communications, pharmaceuticals, and test and measurement tools.

Patents are about the development of new technologies, new products and production processes. The growth of patent applications filed by businesses and other organizations is an important indicator of a country’s innovation performance and therefore its long-term economic growth, which is closely linked to technological progress. Patents, however, are an imperfect proxy for a country’s level of innovation. Patenting varies considerably across industries, depending on technology and R&D, as well as market and competition dynamics. Typically, patenting is more relevant in technology-intensive industries in manufacturing (biotech, pharma, ICT, medical instruments), while it is limited in low-tech industries, such as textiles and food, and also in the service sector, which can otherwise be very innovative. There are also significant differences between large and small companies, since the costs and complexity of the procedure for filing for a patent application are often too high, considered the uncertainty of the commercial outcome. Patent applications therefore reflect only in part the current level of innovative activity in a country.

The data available at company level suggests that companies adopting innovative strategies combine different types of innovation: product and process innovation, yes, but also the introduction of new marketing methods or organizational forms, which in most cases cannot be patented. In addition, among innovative companies, the percentage of enterprises using systems of intellectual property protection to maintain or increase competitive advantage is relatively low.

According to the latest Eurostat data, Italy ranks fourth in the European Union for percentage of innovative firms over the total (56.1% vs. a European average of 48.9%). In the country, particularly widespread are companies that develop process innovations (30.4% compared to a EU average of 21.4%). However, if you look at the use of intellectual property systems, only 12.5% of Italy’s innovative companies use patents (vs. a EU average of about 30%), 14% register their industrial designs (compared to a  EU average of 25%), and 28.6% their trademarks (the EU average is 40%).

To assess how innovative a country is, it is therefore necessary to supplement the analysis of patents with the analysis of other innovation indicators. An important tool in this respect is the Innovation Union Scoreboard, which provides an overview of innovation in various European countries, through the analysis of a set of 25 indicators capturing the factors facilitating innovation (human capital, the system of research, financial investment in R&D), the innovative activity of firms in terms of input and output, and the impact of innovation on the overall economy. The development of this kind of analysis is going to become increasingly important in the future to understand the actual innovation capabilities of a given economy, and in particular to design targeted policies supporting a country’s innovation and competitiveness.