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The multitude of research work on Creative industries speaks to the importance of this sector of the knowledge-based economy. Creative industries worldwide have witnessed rapid growth in the past decade and this has prompted more interest in this sector. Research on innovation in creative industries on the other hand has been rather limited, although several studies have indicated useful approaches to the management and organization of innovation relevant to the creative industries, however empirical studies in this respect are still far from comprehensive, hence prompting this empirical research on the impact of innovation on productivity in Creative Industries with a focal point on China Online Game Industry.

This paper empirically studies the links between innovation and productivity at the firm level in Creative Industries using Chinese Online Game Industry as the focal point of its analysis. This paper bases its analysis on the recommendations of the Oslo Manual, this approach provides a way to achieve a high level of comparability within the Industry, it also provides standard definitions and indicators of innovation. The paper went further to adopt the scoring matrix approach in order to capture and delineate the various dimensions, dynamics and key features of online gaming enterprises in China. Indicators adopted in the analysis were selected based on literature review and statistical analysis.

The empirical approach is based on data obtained from enterprise-based surveys of innovative activity in Chinese online game firms. The paper applied an econometric model of Research and Development, innovation and productivity interrelations at a firm level similar to that of Crépon, Duguet, and Mairesse (1998) for France, to the micro data obtained for China online gaming industry.