The views expressed are those of the author(s) and should not be attributed to the Economic Research Service or USDA. Putting the Subject Back into Subject-Based Innovation Research: Latent Class Analysis in the 2014 ERS Rural Establishment Innovation Survey Timothy R. Wojan Economic Research Service/USDA Paper presented at OECD Blue Sky III Ghent, Belgium 19-21 September, 2016
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The views expressed are those of the author(s) and should not be attributed to the Economic Research Service or USDA.
Putting the Subject Back into Subject-Based Innovation Research: Latent Class Analysis in the 2014 ERS Rural Establishment Innovation Survey
Timothy R. WojanEconomic Research Service/USDA
Paper presented at OECD Blue Sky IIIGhent, Belgium
19-21 September, 2016
The views expressed are those of the author(s) and should not be attributed to the Economic Research Service or USDA.
Outline of Talk• Strong priors that rural innovation is rare and
largely inconsequential • Challenge to conventional wisdom requires
credible measure of substantive innovation• Assume experiences of substantive innovators
unique and can be elicited with simple questions
• Do identified substantive innovators satisfy tests of internal and external validity?
• Feasibility and assessment of “rural innovation policy” requires credible measure of substantive rural innovators
The views expressed are those of the author(s) and should not be attributed to the Economic Research Service or USDA.
CIS findings contradict but do not overturn conventional wisdom
• NBER, Brookings, World Bank either wholly disregard or disqualify rural in regional studies of innovation
• CIS findings on rural innovation based on response to single ambiguous question
• North and Smallbone (2000): 49% of rural UK mftrs regarded selves as “innovative” based on CIS response but industry experts rated only 24% as “highly innovative”
The views expressed are those of the author(s) and should not be attributed to the Economic Research Service or USDA.
2014 ERS Rural Establishment Innovation Survey
• First nationally representative self-reported innovation survey for Rural America
• Oversampled rural establishments but allocated a quarter of the sample to urban establishments for comparison
• Sample size 11,000 for all establishments with 5 or more employees in nonfarm, tradable sectors
• Sought more efficient way of IDing substantive innovators
The views expressed are those of the author(s) and should not be attributed to the Economic Research Service or USDA.
Assume that struggling with innovation alters responses to key
questions• EU CIS core questions in combination with
other observable characteristics –New or significantly improved goods, services,
processes, logistics, marketing methods.–Are innovation investments capital constrained?–Acknowledge failed innovation initiatives?–Possess intellectual property worth protecting?–Does data drive decision-making?
The views expressed are those of the author(s) and should not be attributed to the Economic Research Service or USDA.
IDing Substantive and Nominal Innovators Using Latent Class Analysis (LCA)
• Assumes that sample drawn from distinct but unobservable subpopulations inferred from the data
• Latent class analysis resolves two main problems of classification in large datasets:– Classification is probabilistic – Can be estimated incorporating complex
sample design with the MPlus statistical package
The views expressed are those of the author(s) and should not be attributed to the Economic Research Service or USDA.
Latent Class Analysis with Covariates SchematicOutcomes
The views expressed are those of the author(s) and should not be attributed to the Economic Research Service or USDA.
Whether these subpopulations truly exist is an empirical question
• Initial results will be in cross-section:– Do auxiliary questions provide a sufficient threshold?– Are establishments in more innovation intensive sectors more
likely to respond affirmatively to auxiliary questions? • Linking REIS to the longitudinal business data at
BLS or Census will provide dynamic performance data to compare substantive with nominal innovators
• Broad but shallow survey research supplemented with narrow but deep case study research
Purchase or License Patents Participated in a Patent Application Registered an Industrial Design Registered a Trademark Produce Material Eligible for Copyright
17.38%16.63%
8.35%
30.97% 31.23%
6.02%
2.31%
1.10%
6.15%
8.31%
4.69%
3.02%
0.96%
5.66%
8.11%
Validity wrt Survey Responses: Innovation Related Activities
The views expressed are those of the author(s) and should not be attributed to the Economic Research Service or USDA.
Is the innovation measure picking up things that citizens care about?
• Associating substantive innovation with establishment performance such as productivity, exports, employment growth, survivability, etc. must wait for these data to become available
• In the meantime, retrospective employment experience possible based on 2014 county-industry innovativeness estimate and county-industry employment growth in recovery 2009-2014.
The views expressed are those of the author(s) and should not be attributed to the Economic Research Service or USDA.
Table 9: Regressions of County-Industry Employment Growth, 2009-2014
Variable Parameter Estimate
Standard Error t Value Pr > |t|
Probability Substantive Innovator
82.69 43.02 1.92 0.0546
Share Introducing New Products or Processes
(CIS Equivalent)
-60.61 37.88 -1.60 0.1097
Probability Nominal
Innovator-116.0698 54.081 -2.15 0.0319
Probability Non-
Innovator-14.59 54.01 -0.27 0.7870
Source: 2014 ERS Rural Establishment Innovation Survey and BLS Quarterly Census of Employment and Wages Coefficient estimates for intercept, population, and industry controls not reported
The views expressed are those of the author(s) and should not be attributed to the Economic Research Service or USDA.
Table 10: Regressions of County-Industry Employment Growth, 2009-2014, Selected
Sectors
Source: 2014 ERS Rural Establishment Innovation Survey and BLS Quarterly Census of Employment and Wages Coefficient estimates for intercept, population, and industry controls not reported
Industrial Sector Variable Parameter Estimate
Standard Error t Value Pr > |t|
Fiber Probability Substantive Innovator
38.64 132.15 0.29 0.7709
Fiber Share Introducing New
Products or Processes (CIS Eq.)484.33 83.795 5.78 <.0001
Food Probability Substantive
Innovator-146.081 52.49 -2.78 0.0057
Food Share Introducing New
Products or Processes (CIS Eq.)-110.174 52.933 -2.08 0.0383
Information Probability Substantive
Innovator412.369 76.328 5.40 <.0001
Information Share Introducing New
Products or Processes (CIS Eq.)200.25 62.53 3.20 0.0015