Household sector innovation in China: Impacts of income and motivation

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.