۱- Introduction and overview

۲- Literature review

۳- Methods

۴- Findings

۵- Discussion

References

Abstract

This research note reports upon the first survey of household sector innovation in China. Compared to previous survey studies we add two first-of-kind variables and related findings. First, we include data on individual income, a resource-related antecedent of household sector innovation. We find that higher individual incomes are strongly associated with increased frequency of both household sector innovation and innovation diffusion. When we combine personal income effects with the positive impact of educational levels and technical training (both competence-related antecedents), it appears that increases in national development are associated with increases in household sector innovation – a very useful public policy finding. Second, in this survey we included household sector innovations motivated by personal need and additional motivations related to learning, fun, helping others and selling/commercialization. This has a major impact on estimated household sector innovation frequencies – raising them by a factor of approximately 1.4. Reanalysis of data obtained in two earlier national surveys suggests that similar adjustment factors hold in those nations too. This finding shows that prior surveys have significantly underestimated household innovation. For many research purposes, such as national accounting, the total amount and value of household sector innovation is what is of interest, independent of motivations that may drive the activity.

Introduction and overview

A household sector innovation is defined as a functionally novel product, service or process developed by consumers at private cost (von Hippel, 2017: 1). In contrast to the business or government sectors, the household sector is the consuming population of the economy, in a word all of us, all consumers, “all resident households, with each household comprising one individual or a group of individuals” (OECD, 2013: 44). Household production entails the “production of goods and services by members of a household, for their own consumption, using their own capital and their own unpaid labor” (Ironmonger, 2000: 3). Household sector innovation, therefore, is a form of household production. At the time of this writing, surveys of household sector innovation have been carried out in nine countries, showing that, in aggregate, tens of millions of individuals in these nations spend tens of billions of dollars annually developing and improving consumer products. In the study of household sector innovation in China we report upon here, we add two new important findings to the learnings from previous surveys and studies. First, in the China survey we collect data on the income of household sector innovators. Previous studies have investigated competencerelated indicators of consumers’ innovation ability, including education level and technical education and work experience (von Hippel, Ogawa and de Jong, 2011). Income, we suggest, adds an important resourcerelated dimension. Our analyses show that income is strongly related to levels of household sector innovation. Individuals at the highest income levels measured in China are 4 to 5 times more likely to innovate. In addition, we find that income is positively related to the likelihood of diffusion of household sector innovations. Specifically, at high incomes the odds of diffusion to peers more than double, while the odds of commercial diffusion are 15 times higher relative to those in the lowest income categories. When we combine the effect of income with previously-documented variables found significantly associated with household sector innovation (education level and technical work experience) a general picture emerges that the frequency and diffusion of household sector innovation is likely to increase along with global trends towards increased education and income.