Trademarks and incorporations drive strong increase in innovative economic activity in Michigan during the first quarter of 2010, according to UM-Dearborn study

August 30, 2010

DEARBORN / Aug. 30, 2010---An increase in trademark applications and incorporations helped drive innovative economic activity in Michigan during the first quarter of 2010, according to the “innovation index” compiled by scholars at the University of Michigan-Dearborn College of Business.

The index rose to 89.0 from 83.3 in the fourth quarter of 2009, putting the index above its year-ago level of 80.0 and at its highest point since the third quarter of 2008 before the worst of the credit crunch.

“The quarterly rebound, which came despite disappointing job creation news, was due to a reversal of the earlier decline in trademark applications combined with increases in incorporations and Small Business Administration loans,” according to Lee Redding, associate professor of business economics and director of the Innovation Index at the College of Business.

The quarterly index, a project of UM-Dearborn’s Center for Innovation Research, or iLabs, provides a summary measure of economic innovation activity in the state of Michigan. The index tracks economic innovation in Michigan based on calculations of employment of “innovation workers,” trends in venture capital, trademark applications, incorporation activity, small business loans and gross job creation. Four components of the index rose during the quarter while two declined.

“Looking ahead, it appears that the next report will show second quarter innovative activity relatively similar to the first quarter,” Redding said.  

The number of trademarks applied for in the state showed an increase in the first quarter, reversing a sharp fourth quarter drop.  “The increase put the number of applications above year-ago levels and added 4.8 points to the index for the quarter,” Redding said.

The number of incorporation filings increased strongly in the first quarter, adding 2.4 points to the index.  “Although a seasonal component often pushes up incorporations in the first quarter, the number also is higher than its year-ago level,” Redding said.

The number of small business loans rebounded in the first quarter.  Aided by the stimulus plan, the number of loans reached its highest level since 2008 and added 1.6 points to the index in the first quarter.

Employment of “innovation workers” continued a rebound in the fraction of Michigan workers employed in science and engineering, adding 0.4 points to the index in the quarter.
The reported number of new jobs created by new companies or companies adding jobs fell to approximately 212,000 during the fourth quarter of 2009, erasing most of the gains from the previous quarter and reducing 3.0 points from the index. (Due to data availability, this item enters the index calculation one quarter late.)

Venture capital activity in the state continued a drop from the previous quarter and hit the lowest level since 2007, costing the index 0.5 points, according to Redding.

The Innovation Index for the second quarter of 2010, with a preliminary estimate for the third quarter of 2010, will be released in November.

Redding collaborates on the project with economist Anne-Louise Statt.


About University of Michigan-Dearborn
Founded in 1959 with a gift of just over 200 acres of land and $6.5 million from the Ford Motor Company, UM-Dearborn has been distinguished by its commitment to providing excellent educational opportunities responsive to the needs of southeastern Michigan. The university has 8,700 students pursuing undergraduate, master’s, doctoral and professional degrees in the liberal arts and sciences, engineering, business, education, and public administration. With a faculty devoted to teaching, and students committed to achievement, UM-Dearborn has been shaped by its history of interaction with business, government and industry in southeastern Michigan, and is committed to responding to the needs of the region in the future. 


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