This study of innovation - its intensity, the sources used for knowledge creation, and its impacts - is based on a comprehensive survey of innovation of Canadian manufacturing firms. Attention is paid to the different actors in the system, who both compete with and complement one another. The study investigates how innovation regimes differ across size of firm and across industries. Owing to the high degree of foreign investment in Canada, special attention is paid to the performance of foreign-owned firms. The innovation regime of Canadian innovators is compared with results of studies of other industrialized countries. The picture of a typical innovator is a firm that combines internal resources and external contacts to develop a set of complementary strategies. The study finds that innovating firms depend not only on R&D, but also on ideas and technology from various other sources, both internal and external to the firm.

The book analyzes how manufacturing firms bring new and improved products and production processes to the market. It examines sources of innovative ideas and technologies; the role of R&D activity; the use of patent protection and other government policies; and the effect of innovation on employment and various performance indicators such as profitability and export performance. It reveals how these processes differ between small and large firms; domestic and multinationals, and across industries. Although the primary focus is on Canadian manufacturing firms, the results are adjusted to reflect recent empirical studies from other industrialized countries.