7. Benchmarks: The Extent and Success of Innovation
We consider two main innovation output measures: the proportion of plants
introducing new or improved products during each three year period (i.e. 1991-93,
1994-96, 1997-99); and, the percentage of sales accounted for by new products. The
former can be interpreted as an indicator of the extent of innovation activity in the
region and the latter as an indication of innovation success.
As we might expect from the earlier discussion of increasing competitive pressures,
the extent of innovation activity increased in overall terms from 1991-93 to 1997-99
period in Northern Ireland and, most sharply, in Bavaria (Figure 9). Increases in the
extent of innovation activity in Northern Ireland, and Bavaria suggest some regional
convergence. One consequence of the overall increases in the extent of innovative
activity, combined with the tendency towards shorter product lifetimes and intensified
global competition, might be an increase in innovation ‘success’ or the percentage of
plants’ sales derived from innovative products (Figure 10). What we observe,
however, is a marked contrast between Northern Ireland and Republic of Ireland on
one hand, where the percentage of sales derived from innovative products has actually
fallen since 1991, in Bavaria, where the percentage of sales of new products has
increased (Figure 10). Even more striking is that in 1991 Northern Ireland and the
Republic of Ireland actually had higher overall proportions of new products in sales
(22-23 per cent) than Bavaria (15 per cent), an advantage they had lost by 1999.
Taken together these measures of the extent and success of innovation imply a similar
situation in Northern Ireland and the Republic of Ireland, i.e. an increase in the overall
extent of innovation but a decline in innovation success. This itself reflects a marked
contrast between SMEs on one hand and larger firms on other. For SMEs in Northern
Ireland and the Republic of Ireland a decline in the extent of innovative activity is
consistent with a decline in innovation success (or the percentage of sales derived
from new products). The situation for larger firms is more worrying as the extent of
innovation has increased but innovation success declined. One clear possibility is that
- for whatever reason - larger firms in Northern Ireland and the Republic of Ireland
were introducing more marginal innovations over this period which achieved limited
market success.
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