Perceived Innovation of Israel's Largest Firms: an Empirical Study

Innovation is understood as a chain-linked, non sequential process in which research and development may be embarked upon at various stages. Therefore, there are various ways to measure innovation; there seems to be no single catch-all index. One approach is not to attempt to measure actual innovation but to assess the perceived innovativeness by trained business observers. This paper reports on perceived innovations among the largest Israeli firms, measured by surveying a group of experienced managers. The posited links among innovativeness, sales revenue, the growth in sales revenue and profitability are examined statistically. It is found that perceived innovation is neither a cause nor an effect of growth in sales revenue, with some industries being notable exceptions. However, perceived innovation may be explained by the visibility of firms. Those firms whose shares are traded on U.S. exchanges are more frequently perveived as innovative.