functioning (dynamic) innovation system, and the two terms should therefore not be treated as
one term but rather as two interdependent ways of enhancing growth. It is therefore now
commonly admitted that innovation is a more complex phenomenon going beyond R&D. The
link between R&D and innovation is less clear-cut and less linear than earlier assumed. Firms
can be engaged in the innovation process without performing R&D; they can participate in the
innovation process through diffusion or implementation of new techniques or processes.
A Danish study found that most companies are able to distinguish between R&D and innovation.
Other countries have had more difficulties during their collection of data for the joint European
innovation survey (ISIC) and the data are therefore not published on a European basis.
Box 1 - Innovation expenditures
The Community Innovation Surveys (CIS) are the main statistical instrument regarding innovation.
The surveys are carried out after joint guidelines prepared by Eurostat and the member states based on
the “Oslo-Manual” by OECD 1997.
The countries are, among other things, asked how much they spend on innovative activities.
Unfortunately, due to the fact that some companies either do not want to answer the question or are not
able to and an overall low response rate the data are not published. In Denmark, however, the Danish
data are published and can therefore help us get an idea of the magnitude of the innovative
expenditures.
Even though the Danish figures are published, there are problems concerning the interpretation. First
of all, some companies found it difficult to separate between R&D expenditures and innovation
expenditures. Also, the survey showed that the estimate for R&D expenditures is significantly lower
than previously published data. The data should instead be comparable. Other countries have had the
same problems when trying to register innovation expenditures and R&D expenditures in the same
survey.
Having these caveats in mind the table below gives an overview:
Table a - The Danish R&D and innovation expenditures
Expenditures as pct. of GDPPrivate R&D 1.75Private innovationa (excl. of R&D) 0.25Public R&D 0.70Total R&D and innovative expenditures 2.70Note: a The innovation expenditures amounts in total to 2 pct. of GDP. The innovation expenditures, however, include both
innovation and R&D, and the 1.75 pct. are therefore subtracted from 2 pct..
The example shows that by including the innovation expenditures Denmark is closer to the target of 3 pct.
Source: OECD and The Danish Institute for Studies in Research and Research Policy.In institutions of higher education, research and teaching are often closely linked, as most
academic staffs do both. Because the results of research feed into teaching, and because the
information and experience gained from teaching can result in input to R&D, it can be very
difficult to separate the two. The Frascati manual proposes that it is the elements of novelty that
distinguish R&D from routine teaching and other work-related activities. The manual admits
that it can be a problem to decide whether or not scientific activities that are by-products of
educational and training activities can be considered as R&D.