Testing biasedness of self-reported microbusiness innovation in the annual business survey

January 12, 2024

This study tests for potential bias in self-reported innovation due to the inclusion of a research and development (R&D) module that only microbusinesses (less than 10 employees) receive in the Annual Business Survey (ABS). Previous research found that respondents to combined innovation/R&D surveys reported innovation at lower rates than respondents to innovation-only surveys. A regression discontinuity design is used to test whether microbusinesses, which constitute a significant portion of U.S. firms with employees, are less likely to report innovation compared to other small businesses. In the vicinity of the 10-employee threshold, the study does not detect statistically significant biases for new-to-market and new-to-business product innovation. Statistical power analysis confirms the nonexistence of biases with a high power. Comparing the survey design of ABS to earlier combined innovation/R&D surveys provides valuable insights for the proposed integration of multiple Federal surveys into a single enterprise platform survey. The findings also have important implications for the accuracy and reliability of innovation data used as an input to policymaking and business development strategies in the United States.

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Experimenting in the Cloud: The Digital Divide’s Impact on Innovation

August 8, 2023

This paper builds on a National Science Foundation working paper that identified a strong association between cloud use and various types of innovation but did not consider whether 1) cloud adoption is a reliable indicator of the innovation orientation of a firm, or 2) cloud adoption enables various types of innovation. The researchers estimate propensity score matching and endogenous treatment effect models to control for innovation orientation, producing evidence to test the second explanation. Findings support an enabling effect of the cloud on innovation providing concrete evidence of the adverse impact of the digital divide.

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Internationalization of the Rural Nonfarm Economy and the Cloud: Evidence from US Firm-Level Export Data

July 23, 2023

The move toward universal broadband availability envisioned in the Broadband Equity, Access, and Deployment Program presents a double-edged sword for many rural communities: increasing the leakage of local spending to more internet sales countered by better opportunities for tapping remote markets. This paper uses confidential data to examine how export intensity is affected by subscription to cloud computer services—a technology that requires very high-speed broadband. Earlier research identified an enabling effect of the cloud on various types of firm-level innovation, effectively reducing the cost of experimentation by replacing large fixed IT investments with a pay-as-you-go service. To the extent that exporting places new demands on IT-enabled functions such as order fufillment and tracking, marketing, or document control, cloud subscriptions could substantially reduce the cost of entering, and excelling in, export markets.

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An Examination of the Informational Value of Self-Reported Innovation Questions

October 1, 2022

Self-reported innovation measures provide an alternative means for examining the economic performance of firms or regions. While European researchers have been exploiting the data from the Community Innovation Survey for over two decades, uptake of U.S. innovation data has been much slower. This paper uses a restricted innovation survey designed to differentiate incremental innovators from more far-ranging innovators and compares it to responses in the Annual Survey of Entrepreneurs (ASE) and the Business R&D and Innovation Survey (BRDIS) to examine the informational value of these positive innovation measures. The analysis begins by examining the association between the incremental innovation measure in the Rural Establishment Innovation Survey (REIS) and a measure of the inter-industry buying and selling complexity. A parallel analysis using BRDIS and ASE reveals such an association may vary among surveys, providing additional insight on the informational value of various innovation profiles available in self-reported innovation surveys.

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The impact of external knowledge sourcing on innovation outcomes in rural and urban businesses in the U.S.

June 29, 2020

A summary of “The impact of external knowledge sourcing on innovation outcomes in rural and urban businesses in the U.S.,” by Kathryn R. Dotzel and Alessandra Faggian. Published in Growth and Change, 2019; 50: 515– 547. https://doi.org/10.1111/grow.12289. This brief was published on June 29, 2020.

Key Takeaways

• This study explored the relationship between innovation and knowledge management–the formation of structures that allow businesses to acquire and integrate new knowledge. The specific focus was on external knowledge sourcing–which outside sources firms target for information that supports the development of new and improved products and production processes.
• For both rural and urban businesses, sources of information characterized by strong ties and high degrees of trust (“primary” sources) had larger positive impacts on most considered innovation outcomes (compared to “secondary” sources).
• When primary knowledge sources were distinguished by industry orientation relative to the business, sources with knowledge bases outside of the business’s industry (“extra-industry” primary sources) had stronger positive relationships with the majority of considered innovation outcomes for rural businesses. Urban businesses, however, seemed to derive relatively equal benefits to innovation from relationships with their extra-industry and “intra-industry” primary sources–those with knowledge bases within the same industry.

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Sources of inspiration matter to business innovation outcomes

June 29, 2020

A summary of “Sources of innovation and innovation type: firm-level evidence from the United States,” by Mehmet Afik Demircioglu, David B. Audretsch, and Timothy F. Slaper. Published in Industrial and Corporate Change, 2019, 1-15, https://doi.org/10.1093/icc/dtz010. This brief was published on June 29, 2020.

Key Takeaways

• Businesses tap different sources of knowledge and creativity to drive their innovation activities. Different innovation outcomes are associated with different sources of knowledge.
• Customers, workers, and universities are sources of knowledge positively associated with all types of innovation activity.
• Universities had the statistically strongest effect, suggesting that they are critical to innovation.

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Innovation, Broadly Measured, and Its Effects on Business and Community Economic Health

June 4, 2019

A summary of “Firm and Regional Economic Outcomes Associated with a New, Broad Measure of Business Innovation,” by Brian Whitacre, Devon Meadowcroft, and Roberto Gallardo, Entrepreneurship and Regional Development, June 2019, 1–23.

Key Takeaways

• Using a broad definition of innovation allows researchers to compare the
• innovation activity of businesses across different industries and locations, including rural and urban.
• Innovation, even when defined broadly, is positively associated with economic benefits at both the business and the regional level.
• Therefore, future policies should promote innovation activities that are included in the broader measure of innovation described here.

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