[Federal Register Volume 72, Number 71 (Friday, April 13, 2007)]
[Notices]
[Pages 18627-18628]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 07-1827]


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DEPARTMENT OF COMMERCE

Economics and Statistics Administration


Innovation Measurement

AGENCY: Economics and Statistics Administration, Department of 
Commerce.

ACTION: Notice and request for comments.

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SUMMARY: The Department of Commerce is seeking public comment on issues 
related to the measurement of innovation. This request supports efforts 
of the Measuring Innovation in the 21st Century Economy Advisory 
Committee to collect seek advice from the public as it prepares 
recommendations for the Secretary of Commerce on new or improved 
measures of business innovation.

DATES: Written comments on this notice must be submitted on or before 
May 11, 2007. Please note that all comments will be made public and 
published on the Committee's Web site at: www.innovationmetrics.gov.

ADDRESSES: You may submit comments by any of the following methods:
    E-mail: [email protected].
    Fax: (202) 482-2889 (Attn.: Elizabeth ``E.R.'' Anderson).
    Mail or Hand Delivery/Courier: Elizabeth ``E.R.'' Anderson, Room 
4836 U.S. Department of Commerce, Economics and Statistics 
Administration, 14th Street & Pennsylvania Avenue, NW., Washington, DC 
20230. Because we continue to experience delays in receiving mail, 
respondents are encouraged to submit comments by mail early, or to 
transmit them electronically.

FOR FURTHER INFORMATION CONTACT: For questions on the submission of 
comments, contact Elizabeth ``E.R.'' Anderson.

SUPPLEMENTARY INFORMATION: The charter establishing the Measuring 
Innovation in the 21st Century Advisory Committee (the Committee) calls 
for the Committee to make recommendations to the Secretary of Commerce 
on ways that will permit better measurement of innovation and its 
impact on the U.S. economy.
    The Committee is charged with developing innovation metrics that 
inform policy decisions and enable policymakers and the business 
community to better monitor innovation. Among other things, the 
Committee's work should build on the way firms assess the effectiveness 
of their own innovative activities. The recommendations should not only 
focus on measuring innovation activities and inputs, but should also 
focus on the results and output of innovation. Furthermore, the 
recommendations should allow for analysis at industry, sector, 
national, and international levels.
    The type of innovation for which measurement improvement is sought 
is defined as:

    The design, invention, development and/or implementation of new 
or altered products, services, processes, systems, organizational 
structures, or business models for the purpose of creating new value 
for customers and financial returns for the firm.''

    The recommendations will cover the following four major categories 
identified by the participants during the initial meeting of the 
Advisory Committee:
    1. Improvement of the underlying architecture of the U.S. System of 
National Accounts to facilitate development of improved and more 
granular measures of innovation and productivity;
    2. Identification of appropriate economy-wide and sector-specific 
statistical series or other indicators that could be used to quantify 
innovation and/or its impacts;
    3. Identification of firm-specific data items that could enable 
comparisons and aggregation; and
    4. Identification of specific ``holes'' in the current data 
collection system that limit our ability to measure innovation.
    Comments are solicited to address new and/or improved innovation 
measures in each of the above categories. Following are some specific 
issues and suggestions raised by Advisory Committee members, grouped 
according to the measurement categories listed above, on which the 
Committee specifically invites comment. Comments need not be limited to 
these issues and suggestions, but should address the specific data 
categories.
    1. Improvement of the underlying architecture of the U.S. System of 
National Accounts to facilitate development of improved and more 
granular measures of innovation and productivity. Our national accounts 
are the main source of information about the growth of our national 
output, usually measured by the gross domestic product or GDP. Total 
Factor Productivity (TFP) which measures growth of output per unit of 
input for the economy as a whole and for individual industries is not 
included in the national accounts. Is the concept of TFP sufficiently 
related to innovation to warrant the inclusion of economy-wide and 
industry level TFP in the system of national accounts? If so, what is 
the most effective way to incorporate the concept into the national 
accounts? Are there ways to disaggregate the innovation component of 
TFP to differentiate innovation from other productivity drivers?
    2. Identification of appropriate economy-wide and sector-specific 
indicators that could be used to quantify innovation and/or its 
impacts. Are there measures that accommodate economy-wide (or macro-
economic) and sector-specific notions of innovation? What elements of 
innovation could serve as a foundation for statistical series? To what 
extent would the collection of better data on service sector outputs 
and services inputs used by all firms improve innovation measurement? 
Is market share growth a good indicator of innovation? If so, would 
estimates in the change in U.S. firms' shares of regional, national, 
and global markets be useful innovation measures? Could/should 
collaborative connections between entities be captured? Since a 
characteristic of markets is that the

[[Page 18628]]

benefits of innovations flow, at least in part, to buyers, are there 
ways to identify the flow of innovations across firms and sectors?
    3. Identification of firm-specific data items that could enable 
comparisons and aggregation. Current corporate innovation measurement 
appears to be done primarily on either a project or a portfolio basis. 
Are these measurement practices sufficiently widespread and uniform to 
make data collection on either of these bases practical? Is it possible 
or necessary to collect information on company culture, incentive 
structures, and organizational change? If customer satisfaction is an 
important measure of an innovative firm, how can that be captured? How 
important is it to distinguish between types of innovation (i.e. 
radical versus incremental)?
    What data would be needed to differentiate the characteristics of 
innovative firms within industry sectors from non-innovative firms? 
What are the most important measures of the underlying process of how 
innovation and productivity advances are initiated or stimulated? 
Could/should an understanding of innovation from the consumer 
perspective be developed?
    Could data items from SEC filings be used to enhance understanding 
of innovation in public companies? Are there proxies for relative 
innovative success (e.g. percent of total revenue attributable to new--
or significantly improved to the point where they could be considered 
new--products, services, or processes introduced within the last two 
years into markets where a firm has a growing market share) that would 
provide insight into relative innovative strength? Is two years long 
enough?
    4. Identification of specific ``holes'' in the current data 
collection system that limit our ability to measure innovation. Some 
specific types of data holes were identified during the meeting, 
including lack of data on firm formation, intellectual property 
licensing costs as a type of purchased input, and insufficient product 
detail. What should be the prioritized list of specific data items 
needed to fill the holes?
    Limitations on our ability to link and coordinate across various 
data sets were also mentioned as a hole or deficiency of our current 
data collection system. Are there cost-effective ways of building on 
existing data sets to develop more information on innovation drivers 
and their link to success? How could data sharing and cooperation among 
federal agencies be improved insofar as such agencies maintain data 
series related to the measurement of innovation? Could existing private 
and/or foreign data be combined with existing official statistical 
series in order to better measure innovation? Are there changes that 
could be made to make such combinations possible or easier?
    To assist the Advisory Committee in evaluating and comparing 
specific ideas for new or improved innovation measurement, comments on 
proposals for new or improved innovation measurement should provide the 
following information:
    1. Description of proposal. Proposals for new or improved 
innovation measurement should include the following:
     Specific description of the proposed change.
     Identification of the specific Committee category to which 
the proposal applies.
     Rationale for the proposed change.
     Data description, sources and method of collection.
     Approximate cost and burden estimate.
    2. Impact of proposal on innovation measurement. Proposals should 
include:
     Description of how proposal improves measurement of 
innovation as defined by the Advisory Committee.
     Description of the particular elements of innovation 
measurement that are improved by the proposal.
     Description of how the proposal addresses the issues and 
questions raised by the Committee.
     Description of how the new or improved measure would 
provide appropriate signals of changes in business behavior for the 
purpose of informing policy debates.
    Page Limit--Submissions should be limited to a maximum length of 10 
pages. Identification and Cover Sheet--Each page of the submission 
should be clearly marked with the submitter's name (and organization, 
if applicable), date of submission, and contact information (if the 
submitter chooses to provide it). Each submission should be clearly 
marked as originating from one of the following categories of 
submitters: Individuals, Businesses, Government, Academia, or 
Organizations and Associations.
    All comments must be submitted to the address indicated in this 
notice. The Department requires that all comments be submitted in 
written form.
    The Department encourages interested persons who wish to comment to 
do so at the earliest possible time. The period for submission of 
comments will close on May 11, 2007. The Department will consider all 
comments received before the close of the comment period. Comments 
received after the end of the comment period will be considered if 
possible, but their consideration cannot be assured. The Department 
will not accept comments accompanied by a request that part or all of 
the material be treated confidentially because of its business 
proprietary nature or for any other reason. All comments submitted in 
response to this notice will be a matter of public record. They will be 
available for public inspection and copying and posted on the Advisory 
Committee's Web site at http://www.innovationmetrics.gov.

    Dated: April 9, 2007.
Elizabeth (E.R.) Anderson,
Deputy Under Secretary for Economic Affairs.
[FR Doc. 07-1827 Filed 4-12-07; 8:45 am]
BILLING CODE 3510-06-P