How Innovative are UK Firms? Evidence from the Fourth UK Community Innovation Survey on Synergies between Technological and Organizational Innovations

Using data from the Fourth UK Community Innovation Survey this paper explores the diffusion of a range of innovative activities (encompassing process, product, machinery, marketing, organization, management and strategic innovations) across 16,383 British companies in 2004. Building upon a simple theoretical model it is shown that the use of each innovation is correlated with the use of all other innovations. It is shown that the range of innovations can be summarized by two multi-innovation factors, labelled here 'organizational' and 'technological', that are complements but not substitutes for each other. Three clusters of firms are identified where intensity of use of the two sets of innovations is below average (56.9% of the sample); intermediate but above average (23.7%); and highly above average (19.4%). Distinctive characteristics are found to be common to the companies in each cluster. Finally, it is shown that innovativeness tends to persist over time.