Innovation Nation?

Manufacturers are more involved than other industries in innovation, but engagement is hardly widespread.

As a whole, manufacturing industries operating in the United States are more engaged in innovation than their non-manufacturing brethren. So suggest preliminary data from the National Science Foundation, an independent U.S. government agency that promotes science and engineering.

At least such was the case between 2006 and 2008, the period addressed by the NSF research. Survey data show that about 22% of manufacturers introduced product innovations (defined as one or more new or significantly improved goods or services), compared with 8% of companies in non-manufacturing sectors. The same held true for process innovation: About 22% of manufacturers introduced process innovations compared with 8% of non-manufacturers. (The data are courtesy of the NSF's Business R&D and Innovation Survey, fielded for the first time in 2009. Manufacturers comprised 8% of the 1.5 million for-profit firms represented.)

Not surprisingly, certain manufacturing sectors exhibited significantly higher incidences of innovation than others. For example, approximately 45% of manufacturers in the computer/electronics product sector reported product innovations in the 2006 to 2008 time period, and 33% reported process innovations. Forty-one percent of chemicals manufacturers said they had engaged in product innovation, while slightly more than one-third had engaged in process innovation.

On the other hand, 16% of companies in fabricated metal products reported product innovations and 22% reported process innovations.

The National Science Foundation also noted what it described as one of the clearest findings of the research: Companies engaged in research and development -- either funding or performing R&D -- showed higher rates of innovation than businesses not engaged in R&D. For product innovation, 66% of companies engaged in R&D reported innovation activities versus 7% among those that did not engage in R&D; for process innovation, the percentages were 51% vs. 8%.

Commented Ed Bernstein, president of the Industrial Research Institute: "The ability of America to compete in a global economy is dependent upon our ability to remain innovative. This research demonstrates that supporting R&D will increase our competitiveness."

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