Innovation indicators support research on innovation and the development of innovation policy. Once a policy has been implemented, innovation indicators can be used to monitor and evaluate the result, leading to policy learning. Producing innovation indicators requires an understanding of what innovation is. There are many definitions in the literature, but innovation indicators are based on statistical measurement guided by international standard definitions of innovation and of innovation activities.
Policymakers are not just interested in the occurrence of innovation but in the outcome. Does it result in more jobs and economic growth? Is it expected to reduce carbon emissions, to advance renewable energy production and energy storage? How does innovation support the Sustainable Development Goals? From the innovation indicator perspective, innovation can be identified in surveys, but that only shows that there is, or there is not, innovation. To meet specific policy needs, a restriction can be imposed on the measurement of innovation. The population of innovators can be divided into those meeting the restriction, such as environmental improvements, and those that do not. In the case of innovation indicators that show a change over time, such as “inclusive innovation,” there may have to be a baseline measurement followed by a later measurement to see if inclusiveness is present, or growing, or not. This may involve social as well as institutional surveys. Once the innovation indicators are produced, they can be made available to potential users through databases, indexes, and scoreboards. Not all of these are based on the statistical measurement of innovation. Some use proxies, such as the allocation of financial and human resources to research and development, or the use of patents and academic publications. The importance of the databases, indexes, and scoreboards is that the findings may be used for the ranking of “innovation” in participating countries, influencing their behavior. While innovation indicators have always been influential, they have the potential to become more so. For decades, innovation indicators have focused on innovation in the business sector, while there have been experiments on measuring innovation in the public (general government sector and public institutions) and the household sectors. Historically, there has been no standard definition of innovation applicable in all sectors of the economy (business, public, household, and non-profit organizations serving households sectors). This changed with the Oslo Manual in 2018, which published a general definition of innovation applicable in all economic sectors. Applying a general definition of innovation has implications for innovation indicators and for the decisions that they influence. If the general definition is applied to the business sector, it includes product innovations that are made available to potential users rather than being introduced on the market. The product innovation can be made available at zero price, which has influence on innovation indicators that are used to describe the digital transformation of the economy. The general definition of innovation, the digital transformation of the economy, and the growing importance of zero price products influence innovation indicators.