Methodological Issues in Measuring Innovation Performance of Spatial Units

Abstract

The innovation performance of regions or nations has been repeatedly measured in the literature. What is missing, however, is a discussion of what innovation performance of a region or nation means. How do regions or nations exactly contribute to the innovation output of firms? And how can this contribution be investigated in an empirically sound way? We argue that while the literature offers many suggestions, their theoretical foundation is often weak and the underlying assumptions are rarely discussed. In this paper, we systematize various mechanisms by which spatial units influence firms' innovation activities. On the basis of this, common innovation performance measures and analyses are discussed and evaluated. It is concluded that there is no general best way of measuring the innovation performance of spatial units. In fact, the most interesting insights can be obtained using a multitude of different approaches at the same time.

Keywords:

• Innovation performance
• regional innovativeness
• innovation generation
• regional innovation system
• national innovation system

Notes

¹ In this respect, the manufacturing sector has received much more attention than the service sector. It is also at the core of this paper. However, more studies have started to analyze the service sector as well (see, e.g., Hipp and Grupp, 2005).

² Only when scale effects are absent.

³ However, as Bilbao-Osorio and Rodriguez-Pose (2004) point out, not all variables desired by researchers are always accessible.

⁴ The term “historical events” refers here to events that change permanently the situation in a spatial unit. Hence, they impact on innovation processes indirectly via this change in the situation and characteristics of a spatial unit. Inventions and innovations are not considered to be historical events.

⁵ Adequate weights would reflect the innovation generation of each type of actor, something that is not available in the literature so far but could be measured empirically.

⁶ Another distinction can be made between manufacturing and services, whereby the measurement of innovation in the service sector is a topic of its own and beyond the scope of this paper (but see on this Hipp and Grupp, 2005).