Innovation has long been recognized as an important driver of economic growth. Empirical research and surveys of firms show that innovation leads to new products and services, better quality, and lower prices, although not in a linear fashion. Despite this recognition and interest in the topic, how innovation occurs and how it affects growth is poorly understood. This report provides a review of the business literature on innovation. The paucity of data (especially in the United States) leads to questions about the ability of any new surveys to successfully collect the needed information. To explore those issues, STPI reviewed the innovation literature, examined Community Innovation Surveys conducted by other countries, and engaged in conversations with several firms to find out how they measure innovation and intangibles internally to assess how difficult it might be to obtain such information through a survey instrument. The summaries of these discussions provide compelling evidence that firms do not track this kind of information in any systematic way and that even those that do have very different methods and perspectives. This underscores the need for research and pilot surveys to learn more about how best to collect the needed data.
