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Methodology - Innovations

Data on innovations contained in the Chapter are obtained based on a statistical survey on innovations in enterprises, which is carried out to map innovation potential of enterprises doing their business in the Czech Republic. The statistical survey fully respects methodological principles of the European Union (EU) and of the Organization for Economic Cooperation and Development (OECD) stated in the Oslo Manual (OECD, 2018) and in the Regulation (EU) 2019/2152 of the European Parliament and of the Council. The statistical survey population includes reporting units of the business enterprise sector with 10+ employees in selected key economic activities according to the Classification of Economic Activities (CZ-NACE).

The following are subjects of the statistical survey: product innovations and business process innovations.

A product innovation is the introduction of a good or service that is new or improved on the market. Innovated products must significantly differ from those that have been previously placed by the enterprise on the market. It applies to products or services functional characteristics of which (e.g. technical specifications, components and materials used, software, and user friendliness) or intended usage of which significantly differs from the previous products of the enterprise. It also includes important changes in the design that changes technical, utility, or functional properties of the product.

Slight or small improvements, routine modernisation, seasonal changes (e.g. of clothes) or aesthetic changes in the design that do not change functional, technical, or utility properties of the product are not considered to be a product innovation.

A business process innovation is the implementation of new or improved enterprise activities that significantly differ from those used by the enterprise in the past. Small or routine improvements that do not differ much from the previous ones as for changes, functions, and results are not considered to be a business process innovation.

Business process innovations include:

Internal process innovation, i.e. implementation of (a) new or improved (way of):

  • production or providing of services;
  • logistic activities (e.g. supply/delivery, storage, manipulation with material or distribution);
  • processing of enterprise information, internal communication or provision thereof;
  • accounting, finance (e.g. controlling) or other administrative activities.

Internal process innovations only include significant changes in used techniques, equipment, or software in order to enhance quality, efficiency, or flexibility of production, supply activities, and other auxiliary enterprise activities such as maintenance, purchase, accounting, ICT support, or reduction of a threat to (burden on) the environment or security risks.

A marketing innovation, i.e. implementation of the following changes in marketing or sale:

  • new product design to achieve a better aesthetic impression; 
  • new packaging or a method of packing products that significantly differs from the previous ones (e.g. a key change of the material used for packaging, a distinctively different product packaging look/design); 
  • a new way of promotion or advertising (e.g. utilizing of a new promotion channel such as social networks, internet advertising, building of a new brand, introduction of loyalty cards);
  • new pricing strategy;
  • new selling technique.

A marketing innovation is aimed at addressing customer needs better, entering new markets or finding a new place on the market, and at increasing the enterprise’s volume of sales. The distinguishing feature of a marketing innovation compared to other enterprise’s marketing instruments is the implementation of a marketing method not previously used by the enterprise.

An organisational innovation, i.e. implementation of a new or improved way of organisation or management of:

  • human resources;
  • supplier-customer relations;
  • other enterprise activities (e.g. quality management or flows of knowledge);
  • cooperation with other entities (e.g. forming strategic alliances or industrial clusters);
  • outsourcing of part of enterprise activities.

In case of organisational innovations, it is a major change of an organisational structure, management methods, or cooperation with other entities that have not been previously used by the enterprise, namely in order to enhance usage of knowledge, quality, or to enhance effectiveness of how activities are carried out. 

Innovating enterprises are enterprises, which during the reporting period implemented at least one of the aforementioned innovations.

Expenditure on innovations and sales from innovations in enterprises

Total expenditure related to innovations in the surveyed period includes as follows: expenditure on in-house research and development, purchase of external research and development, acquisition of machinery, equipment, software, and buildings (hardware and software acquired in order to implement new or significantly improved products and/or processes), acquisition of external knowledge (royalties and licence fees paid or purchase of patents, utility and industrial models, production and technical knowledge and procedures, trademarks or copyrights from other entities in order to use them for company innovations) and expenditure on other innovation activities (design, training, introduction of innovations to the market, and other activities related to innovations made).

Total sales of enterprises with product innovation are sales of innovating enterprises, which introduced product innovation in the surveyed period. They are broken down to sales for innovated products (new to the market, new to the enterprise) and sales for unchanged or slightly modified products (products or services, at which the element of “novelty” is missing and they are not considered to be innovated).