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Effects of Different Dimensions of Social Capital on Innovation: Evidence from Europe at the Regional Level

Faculty of Economics and Business Administration Working Paper No. 69

44 Pages Posted: 29 Mar 2007  

Anneli Kaasa

University of Tartu - Faculty of Economics and Business Administration

Date Written: March 19, 2007

Abstract

This paper investigates how different dimensions of social capital influence innovation output. The novelty of the paper lies in the fact that for measuring social capital, instead of one overall index, six factors are constructed of 20 indicators using principal components analysis. Then, human capital and R&D are also included in the analysis as factors of innovation. Unlike many previous studies, this one uses the structural equation modelling approach instead of regression analysis in order to take into account the relationships between the factors of innovation. Regional-level data from Eurostat Regio and the European Social Survey are analysed. Compared to preceding studies, a larger number of observations is used. The findings provide strong support for the argument that social capital indeed influences innovative activity and furthermore, that different dimensions of social capital have dissimilar effects on innovation.

Keywords: social capital, innovation, Europe, regions

JEL Classification: O31, D70

Suggested Citation

Kaasa, Anneli, Effects of Different Dimensions of Social Capital on Innovation: Evidence from Europe at the Regional Level (March 19, 2007). Faculty of Economics and Business Administration Working Paper No. 69. Available at SSRN: https://ssrn.com/abstract=976871 or http://dx.doi.org/10.2139/ssrn.976871

Anneli Kaasa (Contact Author)

University of Tartu - Faculty of Economics and Business Administration ( email )

Narva Road 4-A210
Tartu 51009
Estonia
+ 372 7 375 842 (Phone)

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