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A Two-Step Approach for Identifying the Optimal Innovation Policy Direction Using the Global Innovation Index

Posted: 14 Nov 2016 Last revised: 28 Jun 2017

Dionisis Philippas

ESSCA School of Management

Panagiotis Tziogkidis

Plymouth University

Alexandros Leontitsis

Independent

Date Written: October 11, 2016

Abstract

The Global Innovation Index measures the innovation performance of countries using a wide range of indicators. The key findings of the index reveal policy issues which relate to countries’ efficiency in utilizing their resource endowments for innovation activities, countries' potential to expand their innovation outputs and the key role of the economic environment in fostering innovation. However, the use of equal weighting undermines the usefulness of the Global Innovation Index in offering policy insights towards this direction. We propose a two-step process that utilizes multi-directional efficiency analysis to identify asymmetric potential improvements across countries and innovation pillars, and then applies partial least squares regression conditional each country’s nearest neighbors within a multidimensional space of economic environment. The novelty of our approach is that we assess the potential that a country has to innovate in relation to its economic environment, hence distinguishing between what is considered optimal and what is actually feasible. Three policy directions are outlined when considering countries’ innovation efficiency and potential to innovate, which may contribute in designing tailored innovation policies.

Keywords: multi-directional efficiency analysis; partial least squares; nearest neighbors; Global Innovation Index

JEL Classification: C44, O30, O38, O57

Suggested Citation

Philippas, Dionisis and Tziogkidis, Panagiotis and Leontitsis, Alexandros, A Two-Step Approach for Identifying the Optimal Innovation Policy Direction Using the Global Innovation Index (October 11, 2016). Available at SSRN: https://ssrn.com/abstract=2868639

Dionisis Philippas (Contact Author)

ESSCA School of Management ( email )

55 Quai Alphonse Le Gallo
Boulogne, 92513
France

Panagiotis Tziogkidis

Plymouth University ( email )

Plymouth, Devon PL4 8AA
United Kingdom

Alexandros Leontitsis

Independent ( email )

No Address Available

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