Measuring the diffusion of innovation. The third and last dimension of enterprise measures focuses on the diffusion of innovations within a productive system. This dimension is crucial for the creation of national power, because the diffusion of innovations—be they products or processes—is the way that productivity gains are dispersed throughout society at large. The ability to diffuse innovations effectively must therefore be seen as deriving from two broad but different kinds of sources. The first source is simply the degree of connectivity of different firms with the rest of the national economy. The second source is the number of specialized national or industry-wide research institutes that play a role in building up cumulative technological capability.