The Business Environment and Enterprise Performance Survey (BEEPS) is a joint initiative conducted by the EBRD and the World Bank. BEEPS is a firm-level survey based on face-to-face interviews with managers which examines the quality of the business environment. It was first undertaken in 1999-2000, when approximately 4,100 firms in 25 countries in eastern Europe and Central Asia (including Turkey) were surveyed in order to assess the environment for private enterprise and business development.

It has since been conducted every three to four years or so. The recent fifth round of the survey (BEEPS V) was completed in 2012 in Russia and 2014 in all other countries. BEEPS V involved more than 15,500 interviews with firms in 30 different countries.

The Middle East and North Africa Enterprise Surveys (MENA ES) are a joint initiative administered by the World Bank, the EBRD and the European Investment Bank (EIB). They were first conducted in selected MENA countries in 2013 and 2014. The surveys cover the countries of the southern and eastern Mediterranean (SEMED) – namely Egypt, Jordan, Morocco and Tunisia – as well as Djibouti, Israel, Lebanon and Yemen. Of the SEMED countries, only data for Jordan are available at the time of writing.

Both surveys cover the majority of manufacturing sectors (excluding mining), as well as retail and other sectors – including most service sectors (such as wholesaling, hotels, restaurants, transport, storage, communications and IT) and construction. Only official – in other words, registered – companies with five employees or more are eligible to participate.

In some larger economies (such as Russia, Turkey and Ukraine) the survey is representative across additional subsectors for some of the sectors that make the largest contributions to employment and value added. Firms that are wholly owned by the state are not eligible to participate.21

Measuring firm-level innovation

The innovation sections of BEEPS V and MENA ES build on the established guidelines contained in the third edition of the Oslo Manual,22 covering product and process innovation, organisational and marketing innovation, R&D spending and the protection of innovation.

In the main questionnaire, respondents are asked – by means of simple yes/no questions – whether their firm has introduced any new or significantly improved products, processes, organisational arrangements or marketing methods in the last three years, and whether that firm has spent money on R&D during that period. In order to foster a common understanding of what innovation is, respondents are shown cards containing examples of innovative products, processes, organisational arrangements and marketing methods.23 Firms that have engaged in any of these innovation activities are asked more detailed questions in the innovation module. Crucially, firms are asked to provide a detailed description of their main product or process innovation.

These descriptions of new products and processes are then compared with the description of the firm’s main business, bearing in mind the formal definitions of product and process innovation. As a result of this process, innovations are sometimes reclassified. For instance, they may be changed from a product innovation to a marketing innovation – or even classified as non-innovations. In fact, in BEEPS V only around a third of all self-reported product innovations complied with the relevant definition. A total of 24 per cent were deemed not to represent innovation at all, while the rest were reclassified as other types of innovation. Chart 1.1.1 shows the percentage of self-reported product and process innovations that were reclassified as part of that cleaning process. Two types of misunderstanding were particularly common in this regard:
• The customisation of products was widely regarded as a product innovation. In many cases such customisation does not count as innovation. For instance, seasonal changes to clothing lines and the trading of new products by a wholesaler do not count (unless this concerns a new type of product altogether).
• Firms often failed to distinguish between product innovation
and marketing innovation. A change of design is deemed to be a marketing innovation, as long as the characteristics of the product are not altered. If a garment manufacturer introduces a waterproof outdoor jacket, that is a product innovation, while a new shape for a line of outdoor jackets would be a marketing innovation. Neither would be an innovation for a retail firm selling such jackets. For a retail firm, a marketing innovation might be the introduction of internet sales. In turn, for an e-commerce firm, a significant improvement in the capabilities of its website would be a product innovation.

Even in Israel – which arguably has the most highly developed innovation system of all the countries in the sample – around 60 per cent of all self-reported product and process innovations had to be reclassified.

The innovation module also asks firms to indicate whether the relevant product or process is new to the local, national or international market (thereby providing information on its degree of novelty). While it is difficult to distinguish between innovations that are new to a local market and innovations that are new to a national market, truly world-class innovations can be detected with the aid of internet research on the relevant product or process. Thus, internet checks and information regarding patents and trademarks allow us to see whether a product that is reported as being new to the international market can indeed be considered a global innovation.

All in all, while it is impossible to ensure a common understanding of innovation across all survey respondents, the BEEPS V methodology and the efforts made to cross-check and reinterpret individual responses go a long way towards achieving comparability of results across countries and firms.