Presentation for the Aid for Trade Project by Anna Zaytseva.

1. User Innovation
Empirical Evidence from Russia
Anna Zaytseva
PhD candidate in political sciences,
Centre d'études de la vie politique (CEVIPOL),
Université Libre de Bruxelles (ULB).
Dataset from the joint project carried out
in collaboration with Olga Shuvalova and Dirk Meissner
at the National Research University - Higher School of Economics (Moscow, 2011-2012).

2. Defining User Innovation
§ User-innovators are firms or individual consumers that
expect to benefit from using a novel product or a service
they develop
§ Producer-innovators expect to benefit from selling the
novel product or service they develop in the marketplace
Source: NESTA (2010). Measuring Innovation in UK. London.
Anna Zaytseva, CEVIPOL, ULB,1

3. Defining User Innovation
DOMINANT PRODUCERORIENTED POLICY MODEL
FOCUS ON:
• Stimulating innovation
commercialization
by producers
• Technological
innovations
Higher School of Economics , Moscow 2011
•
•
Green
Innovations
Social
Innovations
OUT OF FOCUS:
10-40% of users are
involved into
modifying and
innovating products
and services
Lacking statiscal
tools
Lacking policy
tools
Lacking consistent
international policy
framework
Anna Zaytseva, CEVIPOL, ULB,1

4. Factors of user-innovation development
Lower communication and
design costs
Better access to
IT equipment
Progressive modularity of
business schemes
Digitalization
Democratization and
globalization of knowledge
More sophisticated user needs/
Customization of demand
Reduction of product cycle/
Acceleration of innovation
dynamics
Anna Zaytseva, CEVIPOL, ULB,1
Loss of the
resources
monopoly
by the
producers
Technological
regime
change

5. New Opportunities for Knowledge Economy (1):
New
Opportuni1es
for
Knowledge
Economy
(1):
More efficient satisfaction of user needs
Surpassing
the
‘informa1on
s1ckness’
and
‘informa1on
asymmetry’
risks
Higher School of Economics , Moscow 2011
Ensuring
higher
success
of
products
and
or/
services
at
the
market
Anna Zaytseva, CEVIPOL, ULB,1

6.
New
Opportuni1es
for
Knowledge
Economy
(2):
New Opportunities for Knowledge Economy (2):
Fostering
the
crea.on
of
new
markets
and
enlarging
Fostering the creation of new markets and enlarging
the
exis.ng
ones
the existing
ones
Bringing functional
innovations to the
markets
Anna Zaytseva, CEVIPOL, ULB,1
Higher School of Economics , Moscow 2011
Exploring
opportunities for
new niches and
new markets
Fostering competition
for better quality
(vs. price-driven
competition)
Source: [de Jong, von Hippel, 2010]

7. New
Opportuni1es
for
Knowledge
Economy
(3):
New Opportunities for Knowledge Economy (3):
Diminishing
transac.on
c for for
knowledge
diffusion
Diminishing transaction costsosts
knowledge diffusion
§ Economics
of
free
revealing:
o spillovers
of
voluntary
informa1on-­‐sharing
by
user
innovators
o documented
in
mul1ple
studies
[von
Hippel,
Finkelstein
(1979),
Ramond
(1999),
Nuvolari
(2004);
Morrison,
Roberts,
von
Hippel
(2000),
Franke,
Shah
(2003),
etc.]
§ For
users
it
is
more
profitable
to
ensure
the
diffusion
of
informa1on
than
informa1on
protec1on:
o reputa1on
advantages,
networks,
quality
improvement
versus
IP-­‐related
costs
§ For
companies
free
revealing
enables:
o to
ensure
broad
diffusion
of
given
know-­‐how’s
while
promo1ng
the
brand
(and
oZen
commercializing
an
accessory
good)
o flexible
adapta1on
of
soZware
for
organiza1onal
and
technical
needs
of
a
given
company
(i.e.
open
source
use)
o Examples:
GNU/Linux
(General
Public
License),
IBM,
Oracle,
Red
Hat,
Google,
etc.
-­‐
Higher School of Economics , Moscow 2011
Anna Zaytseva, CEVIPOL, ULB,1

8. New
Opportuni1es
for
Knowledge
Economy
(4):
New Opportunities for Knowledge Economy (4):
Intensifying
service
sector
development
Intensifying service sector development
§ Meaningful innovations in service sector are often not related to R&D
§ Knowledge-intensive business services (KIBS) are characterized by
- Individualized character of production
Increases
the impact
of user
innovation
In KIBS
- Diversified demand
- Co-production with service customers
Neutralisation of
information
asymetry
Higher School of Economics , Moscow 2011
Building trust
for innovation
products
Source: [Doroshenko, 2010]
Fostering the
absorptive
capacity for
knowledgeintensive
services
Anna Zaytseva, CEVIPOL, ULB,1

9. New
Opportuni1es
for
Knowledge
Economy
(5)
New Opportunities for Knowledge Economy (5)
Enforcing
the
inclusive
model
of
economic
growth
Enforcing the inclusive model of economic growth
§
Inclusive
innova.on
growth
aims
at:
o elimina1ng
the
innova1on
cleavages
for
different
groups
o ensuring
equal
opportuni1es
for
par1cipa1on
in
the
innova1on
process
o
improving
the
welfare
and
human
capital
development
for
vulnerable
groups
à The
user
innova1on
support
as
an
effec1ve
policy
tool
to
compensate
low
level
of
innova1on
ac1vity
in
countries
lacking
technical
and
material
basis
and/or
codified
knowledge
§
Emphasis
on
‘Par.cipatory
approach’
in
interna1onal
organiza1ons:
o
UNDP,
OECD,
UNIDO
Declara1ons
o
The
«
ownership
»
issue
as
a
key
principle
of
interna1onal
ac1on
aimed
at
economic
development,
post-­‐conflict
stabilisa1on,
etc.
Relevant
example:
recogni.on
of
mul.ple
sources
of
innova.on
prac.ces
in
rural
industry
and
promo.on
of
prac.ces
adopted
by
local
users
The
World
Bank
Report
(2010)
«
Innova1on
policy:
A
guide
for
developing
countries
»:
promo1ng
grass-­‐roots
and
pro-­‐poor
innova1ons;
technology
development
in
informal
sector
of
the
economy
and
community-­‐based
development
ini1a1ves
Higher School of Economics , Moscow 2011
§
Anna Zaytseva, CEVIPOL, ULB,1

10. Rationale for a new model of innovation policy
§ User-­‐oriented
innova1on
support
should
not
subs1tute
producer-­‐oriented
policy
tools
but
rather
fulfill
a
complementary
driver
to
improve
innova.on
climate
and
trigger
mass
innova.on
Anna Zaytseva, CEVIPOL, ULB,1
Higher School of Economics , Moscow 2011

11. Measurement of user innovation: the state-of-art
§
The current statistics on innovation reflects the dominant producer-oriented model and R&Dbased innovations
-
§
i.e. OECD statistics: consumer as information provider; yet no data on type of related innovation; on transfer conditions; no
surveys destinated to consumers/users + problems to refect intangible assets
First surveys on user innovations:
1.
Canada: plants using advanced manufacturing technologies
2.
The Netherlands: firm-level survey within the project on S&M development
3.
The UK: first national survey on user innovation at the level of end consumers (NESTA, 2009)
N.B.: the survey did not include questions on user innovations in service sector
4.
§
Empirical Studies conducted in USA and Japan (Ogawa, Pogtanalert, 2011)
In need of improved methodology (intangible assets measurement; precised definition of process
innovation; taxonomy of user innovations, etc.) and more empirical evidence (national, crosssector level, etc.)
Higher School of Economics , Moscow 2011
Anna Zaytseva, CEVIPOL, ULB,1

12. Research methodology (1)
• Objectif : measurement of user-innovators population in
Russia and further advancement in understanding of patterns
which determine user-innovators’ activities
• Main focus: individual end-consumers (and not user innovation at the
firm level)
• Info on the user innovation project:
o Conducted in 2011-2012 by Anna Zaytseva, Olga Shuvalova and Dirk Meissner
o Laboratory for Science and Technology Studies, Institute for Statistical Studies and
Economics of Knowledge, National Research University Higher School of Economics.
Anna Zaytseva, CEVIPOL, ULB,1

13. Research methodology (2)
•
The survey was launched in 2011: series of questions within a larger monitoring survey on the
innovation behavior of Russian population conducted in the framework of the Basic Research
Program of the NRU-HSE.
•
1600 respondents older than 18 years and it covered 130 settlements from 45 Russian regions
(both urban and rural settlements).
•
The size of the sample is thus comparable other empirical studies conducted in the UK, USA
and Japan (1171, 1992 and 2000 respondents accordingly).
•
« Have you ever created new devices, technical equipment for personal consumption (for
you, your family and friends) or to improve something amongst technical devices you
have?».
«Случалось ли Вам в течение последних пяти лет создавать новые устройства,
технические средства для личного потребления (для Вас, Вашей семьи, друзей) или
что-то усовершенствовать в имеющихся в Вашем распоряжении технических
средствах?»
NB This formulation of the questions limits in a way innovative products to devices and techniquebased products. Hence the findings do not include innovation in services, marketing and
organizational innovations.
Anna Zaytseva, CEVIPOL, ULB,1

14. Research methodology (3)
• The questions were built around the following blocs:
1) share of user-innovators and their socio-demographic profile;
2) motivation for innovation activity at home;
3) demand for innovative products;
4) interest for innovative products;
5) channels of information diffusion used by user-innovators.
Anna Zaytseva, CEVIPOL, ULB,1

15. Share of user innovation
Share of consumer innovation
RUSSIA
US
More than five Less than five
years ago
years ago
Consumer creator
1,1%
2,9%
Consumer
modifier
Both
Total
Japan
UK
1,7%
2,1%
3,4%
3,3%
2,8%
2,5%
4,5%
3,5%
0,5%
0,5%
0,5%
5,2%
3,7%
6,1%
7, 8%
Source: Based on [Ogawa, Pogtanalert, 2011].
Anna Zaytseva, CEVIPOL, ULB,1

16. Socio-demographic profile (1):
§
Two thirds of user-innovators are men
§
Higher level of education
§
28% of user-innovators are qualified laborers, 20% of them are specialists
and 23% of them are retirees
§
The age and income distribution is not significantly different from the rest
of the population
NB Given the relatively small sample of user-innovators group we cannot proceed to
detailed quantitative analysis, so at this exploratory stage we are limited to
highlighting some of user-innovator features on qualitative level.
Anna Zaytseva, CEVIPOL, ULB,1

17. Socio-demographic profile (2):
•
New userinnovators» live more
often in middle and
small settlements,
whereas «old
innovators» can be
more often found in
big cities.
Users who created new
products are 1,85 times more
present in middle cities and 1,6
times more present in villages.
This can lead us to suggest that
there is non linear relationship
between user-innovation
activity and type of settlement.
•
Motivation for user
innovation
engagement differs
across types of
settlements!
All
N (Number of respondents)
Family
A
socioB
economic
C
income*:
D
125
3
21
56
19
User-innovators
who did innovations less than 5 years ago
because the products required…
are not sold
are too
out in the
expensive
All
shops
73
21
45
2
0
3
17
5
18
59
60
64
22
30
15
All
respon-
dents
1600
6
23
55
15
E
1
5
0
1
Moscow
Large
cities
8
5
4
7
7
20
19
0
31
21
27
30
36
24
20
20
19
28
10
26
Villages
Type of
settlemen
t*:
1
24
27
32
28
26
Creation
of new
devices
15
25
46
19
1
Modificati
on/
Improvem
ent of
devices
44
75
54
81
3
Middle
cities
Small
cities
Type of
innovatio
ns:
Anna Zaytseva, CEVIPOL, ULB,

18. Differentiation of user
motivation to innovate:
• Users who were motivated to innovate because the items
required were not sold out in the shops are from middle, small
cities and villages. In these settlements in Russia the
market is significantly less saturated with products than in
large cities and especially in Moscow.
• The motivation to innovate because the product is too
expensive is therefore almost equally shared across
different types of settlements, and the biggest share of
people with this motivation can be found in large cities
and villages.
Anna Zaytseva, CEVIPOL, ULB,1

19. Demand for
innovative
products
•
User innovators are
amongst the earliest
consumers of innovative
technical products:
Their household is generally
equipped better than the average
for ten out of thirteen products
•
Higher level of demands
“Demand”. What does your
family have from the items
mentioned above? What would
you like to get/ renew if you
had enough money for the
purchase?
Technical equipment
Demand for technical products
New userinnovators*
All respondents
New userinnovators*
All respondents
73
1600
73
1600
Mobile phone
Flat TV (LCD,
plasmic)
3D-TV
Cable TV
89
91
94
94
50
5
33
38
4
39
66
31
46
66
23
48
Satellite antenna
Digital camera
or videocamera
24
16
35
32
50
43
62
55
Internet access
Hi-speed
internet access
Mobile device
for internet
access
51
45
58
52
28
24
37
35
23
16
28
24
JPRS-navigator
Dishwashing
machine
Air cleaner/
moisturizer/
ioaniser
Air
condititioning
12
7
23
19
9
5
42
28
15
7
36
25
15
12
35
33
N (Number of
respondents)
Questions:
“Technical equipment”. What items from the list do you have in your family?
“Demand”. What does your family have from the items mentioned above? What would you like to get/ renew
if you had enough money for the purchase?
Anna Zaytseva, CEVIPOL, ULB,

20. Perception of
innovative
products (1)
What is the need for userinnovators to cope with modern
technical equipment and new
products in general?
•
“To keep up with life” (43%)
•
User-innovator habits relate more to
work-oriented practices than average
users (19% compared to 12%).
•
•
Adore modern equipment more than
the others (18% compared to 9%)
Yet, their approach towards
novelties is based on critical
assessment, in other words we can
assume that user-innovators have
high expectations to products and
their approval of products is rather
based on their needs than systematic
adoration innovations.
All
respondents
User-­‐innovators
All
who
did
innov.
>5
years
ago
125
73
N
(Number
of
1600
respondents)
Which
of
the
following
statements
reflects
the
best
your
percep.on
of
technical
novel.es?
(Only
one
answer
is
possible)
I
adore
technical
9
14
18
novel1es
and
try
to
use
them
every
1me
Modern
equipment
41
42
43
has
to
be
used
to
keep
up
with
life
I
use
some
of
technical
novel1es
because
it
is
necessary
at
work
12
16
19
My
children
encourage
our
family
to
use
technical
novel1es
12
12
12
I
barely
encounter
modern
equipment
in
daily
life
12
6
3
Modern
equipment
frightens
me
5
3
1
None
of
it
Have
difficulty
to
respond
4
6
5
3
5
0
Anna Zaytseva, CEVIPOL, ULB,

21. Perception of innovative products (2)
• Almost ¾ of user-innovators reported to adjust their
technical equipment according to their needs and taste if
such possibility is provided. Remarkably, almost a half of
users is generally involved into such kind of activities.
• Potential of active user engagement into product
innovation process.
à This is not to be ignored by companies who can facilitate
this process by providing product design or infrastructure
facilities which can enable users to adjust the products
according to their needs and taste.
Anna Zaytseva, CEVIPOL, ULB,
Moscow 2011

22. Channels of information diffusion
•
User-innovators are more closely monitoring the new technology market.
•
Almost a half of them are looking at the emergence of novelties (46% as compared
to 27% in average).
•
They also tend to consult other users’ review and comments available on Internet
(35% amongst “new user-innovators” as compared to 23%) and to get the
information required from the media.
•
Innovative users reported to pay more attention to advertising: 7% of “new userinnovators” try to acquire new products under the influence of advertisement and
31% of them take it into account when making their decisions. Yet, the majority of
users, both innovative and non-innovative are likely to ignore advertising (62% of the
sample and 55% of user-innovators).
•
57% of “new user-innovators” reported to consult user reviews on a particular
product model before buying it.
à This finding emphasizes again the importance of informal sources of information
for users who are likely to adjust their personal equipment according to their
individualized needs.
Anna Zaytseva, CEVIPOL, ULB,

23. Discussion of results (1)
•
User Innovation as Compensation of the Price Factor
o
Russian user innovators (end-consumers) are more driven by the price factor than by product absence on the market.
o
Our hypothesis: user innovators tried to compensate price determination in a local market by enlarging the supply side.
•
User Innovation as Compensation of Market Failures
àour findings reveal the importance of market saturation as a research dimension on user innovation
o
Moscow and Saint-Petersburg concentrate 46% of sales areas of the country
o
the other city with population above million of people concentrate 30% from the remaining sales areas.
o
à75% of population can access only to 24% of sales area [Minpromtorg Rossii, 2011].
o
About 5% of Russian population does not have access to sales areas in their settlements.
o
Access to sales areas is especially difficult in remoted areas in Russia where sales areas often just do not exist.
o
Multiple regions do not seem to be attractive as sales spots since they are characterized by massive outflows of younger population.
•
User innovation provides an indication of unsatisfied demand and inadequate supply. Hence, data on user
innovation is important for designing demand-driven strategies at company level, but also on a more global scale
(industry, regional level, etc.).
Anna Zaytseva, CEVIPOL, ULB,
11

24. Discussion of results (2)
•
Producer innovation is no longer the only way to cover production
expenditures and the costs of innovation. We suggest that further studies
need to focus on user-innovators expenditures in order to explore this
dimension. The methodological problem which has to be addressed next is
to understand the types of innovations which result from user innovation
motivated by the price factor.
•
In-depth analysis of user innovation should also include an analytical
dimension about the properties of the local markets
•
Overall, empirical evidence on user innovation in Russia suggests that
there is a strong potential for stimulation of more active collaboration
with users.
•
Ensuring that innovation is a « routine task » for a broad range of people
would effeciently complement top-down policy initiatives and contribute
to shape conditions for a sustainable innovation-based growth
Anna Zaytseva, CEVIPOL, ULB

25. Thank you very much
for your attention!
Anna Zaytseva
Anna.s.zaytseva@gmail.com
Anna Zaytseva, CEVIPOL, ULB,

26. FURTHER DISCUSSION
Principles for user-oriented innovation model
Key tasks for user-oriented innovation policy:
§ Ensure that there is no negative impact of producer-oriented measures on user innovators
§ Mobilize the potential of « hidden innovation » and individual user initiatives to fully benefit from social and economic spillovers from innovation activity
Key principles:
1. Stimulate individual initiatives (instead of collective activity-oriented support)
2. Formulate and implement new IP regulations (win-win situation)
3. Ensure free access to innovation activities results via grants, competitions schemes
4. Actively contribute to networks development between users and producers
5. Deliver information and organizational support to producers to enhance their interaction
6. Tailored support to inidividual user-innovators becoming enterpreneurs
7. Develop and implement programs to improve innovations skills of the population
8. Improve
indicators
for
innova.on
measurement
Higher School of Economics , Moscow 2011
Anna Zaytseva, CEVIPOL, ULB,1