A recent study using firm-level, “microdata”1 for 21 countries showed that firms investing more in innovation per employee are also those with higher innovation sales and higher productivity levels (Box 2.2) (OECD 2009a, 2010b). This framework structurally models firms’ innovation investment decision, the innovation process and the role of innovation in the production of output. After correcting for the fact that not all firms are innovative, firms involved in collaboration spend 20% to 50% more on innovation than non-collaborating firms. Similarly, firms receiving public funding invest 40% to 70% more than those not receiving public funds.