Proceedings of 9th Asia-Pacific Business Research Conference
5 - 6 November 2015, Bayview Hotel, Singapore, ISBN: 978-1-922069-87-0
Profitable Innovation: An Outline for Further Studies
Wojciech Nasierowski*
The paper explores the issue of innovativeness. It is observed that two perceptions of
innovativeness can be identified; they refer to the same phenomenon, though from
varying perspectives. One deals with a macro-economic view, suitable for big inventive
companies, and levels of innovativeness are measured by composite indexes. The
second perspective is more “shop-floor” oriented and deals with problems of changing
ideas into commercial success.
Some limitations of these perspectives have been
described and the underlying means to reduce differences between them specified.
JEL Codes: O11, O12, 032, P57, B41, C81, C82
1. Introduction
Technological progress depends upon invention, innovation, and creative ideas. The
higher the level of innovation, the more the economy prospers. An increase in the level
of innovation and the enhancement of benefits from this activity are important ingredients in fostering economic activity and boosting competitive advantage. Innovation
augments productivity, and thus contributes to the increase of GDP and wealth of the
citizens. Such a pattern has been recognized long time ago (eg, Lööf & Heshmati, 2006;
Shariff 2006). The ability of governments, businesses and individuals to identify,
respond to, and especially to introduce progressive change is the bedrock of competitive ability (eg. Blanke et.al, , 2003; Rutten & Boekema 2005; Sajeva et.al. 2005). The
more practitioners’ perspectives, taken at a micro-economic level, underlines continuous improvement in technology and business processes as vital to economic
prosperity (Drucker 1984, 133-140).The more strong incentives to invest in innovation
the better. These advantages are extensively discussed and described, and further
presentation may seem to be redundant.
It should be noted though that innovation can be interpreted in different ways (e.g., FM,
2002; OM, 1999, Nasierowski, 2008; Nasierowski, 2000; EIS 2000-2010 and IUS
2014-2015). Further difficulties lie awaiting the researchers when they try to isolate
means to stimulate creativity, as well as enhance innovativeness and entrepreneurship,
along with attempting to improve economic performance of firms. And as if this is not
enough, differences regarding interpretations are further amplified when micro and
macro-economic perspectives are taken into account (Nasierowski, 2009). For the sake
of simplicity and clarity, in this presentation, I will equate inventions with innovation and
creativity and label them all innovation. This study is not dedicated to a discussion about
the merits of Frascatti Manual (FM, 2002) concept versus Oslo Manual (OM, 1999)
interpretation.
Substantial resources are dedicated to innovative and inventive ventures. The results
however, are frequently discouraging. 80% of managers are dissatisfied with the results
of innovation related projects (Cooper 2001). Only 12% to 20% of inventions turn into
_______________________________________________________________
* Ph.D., D.Sc, Wojciech Nasierowski, University of Social Sciences, Lodz, Poland, and University of New
Brunswick, Fredericton, Canada, e-mail: nasierow@unb.ca
Proceedings of 9th Asia-Pacific Business Research Conference
5 - 6 November 2015, Bayview Hotel, Singapore, ISBN: 978-1-922069-87-0
commercial successes. Alva Edison applied for more than 1000 patents – 7 brought
commercial and practical success.
Aspects of innovation can be examined from macro- and micro-economic perspectives.
At a macro level, the concept of National Innovation Systems (NIS), and the use of
composite indexes of innovation (and / or other similar composite indexes, and data
series, that may emulate, or are related to, the concept of innovativeness) can serve as
a platform for discussion about fostering a national propensity and to enhance wealth
and stability. At a micro level, that of enterprises, several methods to stimulate
innovations and encourage employees’ creativity can be explored. The use of many
fragmented approaches can be observed in this area. The objective relative to the use
of these methods is to strengthen or sustain distinctive competencies and competitive
position of companies.
The objective behind this paper is to establish the platform for further studies on innovations, and gain more insights relative to the scope of prospective detailed research
oriented on identification of means to improve results of innovative ventures. In order to
address such research questions the presentation is organized as follows. First the
importance of innovations has been briefly outlined. It is followed (in part 2) by an
outline of major understandings about macro and micro-economic views relative to
innovations. Many works take NIS as a basis for investigation of macro-economic views
on innovation. That leads to the use of composite indexes. It is questioned whether or
not indeed these indexes bring diversity of cross-sections to examination of innovations,
competitiveness, etc. Also some classical interpretations of innovations at a company
level are included. Suggested methodologies for investigation of macro – and microeconomic aspects, along with prepositions (hypotheses) that are worth verification are
presented in part three. Part four summarizes observations and poses prepositions for
further study.
2. Literature Review – Macro and Micro Economic Views on
Innovation
Two perspectives to innovations – macro and micro - seem to be oriented toward the
same goals, yet they act independently. There is little effort to explore methods that
harmonize and utilize the experiences and achievements of the two groups in a
cohesive approach. The two systems operate in different environments, have different
objectives, context, and constraints, yet do they have commonalities? Some of key
differences between these two perspectives are presented in Table 1 (Nasierowski,
2009),
Table 1: Differences between ‘macro’ and ‘micro’ perspectives to innovations
*
*
MACRO PERSPECTIVE
inventions (exploration)
composite indexes
*
*
government, theory, efficiency
correctness (political, legal)
MICRO PERSPECTIVE
innovations (exploitation)
fragmented questionnaire type
studies with little chances to find an
unifying pattern
SME, practice, effectiveness
profit, risk reduction, competitive
Proceedings of 9th Asia-Pacific Business Research Conference
5 - 6 November 2015, Bayview Hotel, Singapore, ISBN: 978-1-922069-87-0
*
*
*
*
*
laboratories, research centers
grants, formal contracts
formal training programs
setting rules and standards
WHAT CAN FEDs OFFER?
position
technology incubators, daily practice
loans
informal business meetings
adopting to conditions
WHAT DO SME WANT?
Therefore, one of the objectives of further studies should be: to identify means that may
permit the transfer of observations/ suggestions from one perspective to another: ie. the
transfer of abundant observations how NIS develop and contribute to betterment to
enterprises’, and how identification of needs of enterprises can be used by governments.
It is also observed that there may be the need to identify different approaches to investtigation of innovations at a macro-economic level to these applicable to the micro-economic considerations. It is disputable, whether these are governments that stimulate
innovations through various means, that may be accepted by companies; or companies
that express needs that regulators should address. What takes precedence?
On the macro-economic level innovations are frequently examined within the context of
NIS, so consequently issues of governmental interventionism and means to stimulate
innovations, parks (incubators) of technological specializations, and aspects of
commercialization of publically funded research are discussed. Innovation is not a new
concept, and issues of innovations are gaining more and more recognition. There is no
single definition of NIS (OECD, 1997). NIS can be defined as “a network of agents and
set policies and institutions that affect the introduction of technology that is new to
economy” (Dahlman, 1994, p.541).
Lundval (2007) identifies two schools of thoughts in the literature about NIS. The first,
prevalent mostly in the USA, tends to define innovation in a narrow sense by focusing
on science and technology policy, and mostly analyzes the systemic relationships
between R&D-efforts in firms and organizations. The other school of thought looks at
innovation in a broader sense and defines innovation as a continuous cumulative
process involving not only radical and incremental innovation, but also the diffusion,
absorption and use of innovation, besides science. However: “there is no consensus on
exactly what [innovation] means” (Krawczenko, 2011, 61).
Since its emergence as a topic in management literature in the late 1980s, the concept
of NIS has undergone significant changes, and has been “further elaborated and
theoretically underpinned in the early 1990s” (Balzat & Pyka, 2008, p.5). At the outset
NIS served to define the key players related to innovation process and the scope of
their activities. Works by Nelson (1993), Lundval (1992), Dosi et.al (1988), i Freeman
(1995) have not used a standardized structure of presentation of NIS, and have dealt
with many countries independently, without an attempt to make cross-country
comparisons. Key characteristic features of innovation processes and items that impact
upon these characteristics have been determined. One of the lines of thinking about NIS
has been directed towards the exploration of efficiency of NIS using parametric
concepts. It is quite probable that if there are more Inputs there will be more Outputs,
and therefore those who invest heavily may be considered more innovative. However,
not only is the level of investment the key to success: efficiency of turning Inputs into
Proceedings of 9th Asia-Pacific Business Research Conference
5 - 6 November 2015, Bayview Hotel, Singapore, ISBN: 978-1-922069-87-0
Outputs also count. Several studies on the efficiency of organizations use the “best
practice frontier” concept: the distance from such a frontier represents inefficiency -- the
inability to produce maximum output from given inputs. Parametric approaches (e.g.,
regression methods) are used to estimate parameters of technical efficiency. However,
many elements, such as multi-collinearity, measurement error, and omitted variables,
can weaken the precision of these parameter estimates (Chapple et.all. 2005).
Consequently, it may be more appropriate to depart from a cursory examination of a
ratio of Inputs to Outputs (e.g., (IUS 2014 (earlier EIS 2005-2010)), and examine “best
practice frontiers” using the non-parametric DEA. This means that the measure of
technical efficiency (the Farrell Input Saving Measure of Technical Efficiency) is
examined as the greatest proportion of inputs which can be reduced and still produce
the same output (Färe & Grosskopf, 1998a I 1998b). Several papers have reported
results related to the use of this approach (e.g., Hollanders & Esser, 2007; Nasierowski,
1997; Nasierowski i Arcelus, 1999; Nasierowski & Arcelus, 2003; Nasierowski, 2008a).
According to Balazat and Hanusch 2004, pp.202-203) this approach can be regarded a
new line of investigation of NIS that originated with works of Nasierowski & Arcelus a
decade ago(so about 1995).
NIS can also be regarded as a subsystem of the national economy where a variety of
agencies co-operate, and impact one upon another when carrying innovative projects.
Whereas descriptions of NIS are easily available, there is no uniformly accepted idea of
how to isolate its subsystems. The questions of formalization of NIS and its subsystems,
and interrelationships among these subsystems remains unanswered. These elements
cannot be formalized and quantitatively examined. The same is true when the impact of
the context of the operation upon the design of NIS is analyzed. The elements in
thematic areas overlap, making reports on NIS, at times, redundant in terms of
information content. Conclusions from such studies are difficult to quantify, as it is
difficult to identify which solutions are correct, efficient and effective. All in all, the
concept of NIS, albeit intellectually stimulating, remains as an abstract one and difficult
to be interpreted from the perspective of daily operational activities. Thus, there is a
need to formalize NIS. .
NIS represent an important component of economic performance. Not surprisingly
therefore, there is a proliferation of institutions/agencies/programs whose activities are
oriented on investigation of issues of innovation, competitiveness, creativity, and
consequently there is a proliferation of voluminous reports. These include, for example:
Canada Council of Canadian reports - The State of Industrial R&D in Canada, 2013,
The State of Science and Technology in Canada, 2012.. In Europe, strong activities are
exercised by OECD (eg.OECD, 2010 and strictly oriented on innovation Innovation
Union Scoreboard (2014) (earlier European innovation Scoreboard) developed within
the ProInnoEurope and InnoMetrics Program. A special Business innovation
Observatory has been commissioned by European Commission, DG Enterprise and
Industry. These are certainly only a few of the initiatives. Yet, it cannot be concluded
that we are getting results worth money spend on these voluminous research reports
and wide encompassing activities. Moreover, such a proliferation may confirm that
innovation is a crucial concept now-a-day: it may also indicate, that there is no
consensus with respect to interpretation and measurement of innovation. Some
measures of NIS can also be traced to composite indexes of innovative – competitive
performance. It has been observed that there is a proliferation of various composite
Proceedings of 9th Asia-Pacific Business Research Conference
5 - 6 November 2015, Bayview Hotel, Singapore, ISBN: 978-1-922069-87-0
indexes that may deal with ideas of innovation, creativity, competitiveness. Hence the
first research question: do these indexes indeed bring more information about reality?
When examining literature overview basics aspects of innovations in SME, or the microeconomic level, again one should start, in my opinion, with classics. The following
issues are often discussed:
*
Why are companies innovative?
*
Does innovation bring about business success?
*
How are innovative projects selected?
The answers to such questions can be traced in two types of literature: one, which
deals with models of entrepreneurship, the other in publications, related to specifics of
innovativeness process.
When discussion ensues models of entrepreneurship, and at the same time the
questions mentioned above, often the Dubin’s (1978) model of entrepreneurship is
referred to as if it is the incumbent. The key elements to business success in SME
explored in this model are information asymmetry and prior knowledge, social network
(weak links, action set, partnerships, inner circle), personality traits (optimism, selfefficacy, and creativity) that may lead to entrepreneurial alertness. Yet, there are also
other models to which we can refer (e.g., Shane & Venkatarman, 2000; Shane, 1999).
“These models are based on different, often conflicting, assumptions borrowed from the
range of disciplines, ranging from cognitive psychology to Austrian economies. While
these attempts have contributed greatly to our understanding of opportunity identification, they fall short in offering a comprehensive understanding of the process for two
major reasons. First, each of these perspectives primarily concentrates on only one of
the various aspects of the process. For example, Sigrist (1999) looks at the cognitive
process involved in opportunity recognition; de Koning (1999) and Hills et.al. (1997) on
the social study network context; while Shane (1999) focuses on the prior knowledge
and experience necessary for successful recognition. However, this focus on specific
factors results in the in depth study of individual factors at the expense of other equally
important casualties in the same study. There is also no agreement among entreprenerschip researchers on major concepts used to define and operationalize the process
in question “ (Ardichvili et.al., 2003, p.107).
3. Suggested Methodology and the Scope of Prospective Studies on
Innovations
3.1. Macro-Economic Perspective to Innovations – Some Aspects to Be
Investigated
The three areas are suggested for examination of macro perspectives to innovations:
A
Formalization of NIS;
B
Unification of composite indexes to innovation (competitiveness, wealth, etc.);
C
Measurement of efficiency and effectiveness of pro-innovation ventures.
A
The existence of a variety of approaches also indicates that there may be some
underlying problems with attempts undertaken. The problem may be associated with
the fact that such lines of investigation rest / originate / are rooted in the concept of NIS.
NIS is an elegant, neat, and intellectually stimulating concept, yet difficult to be
Proceedings of 9th Asia-Pacific Business Research Conference
5 - 6 November 2015, Bayview Hotel, Singapore, ISBN: 978-1-922069-87-0
quantified. Even the identification of NIS subsystems has not been agreed upon. A
model for investigation of NIS in a more formalized manner. Such a model was first
introduced by OECD (1997, 1999), and thereafter by Arundel & Hollanders (2005,
ss.10-25). Some leading policy themes have been identified, which can be regarded as
a starting point to identify subsystems of NIS (Nasierowski, 2009), and consequently as
an entry point in its formalization. Some ideas regarding NIS subsystems, or leading
discussion topics in examination of NIC can also be derived from comprehensive
reports; e.g. EIS (years 2002-2009), IUS (2013, 2014), trend charts on innovation,
OECD (1999), as well as the Global Competitiveness Index (2009). Based on an
overview of the above sources the following subsystems in NIS can be
proposed:
Governance of NIS (GNIS);
Commercialization of research results (CRR);
Human capital development (HCD); and,
Support to innovation (SIN).
These topics are consistent with the Lisbon Strategy (2002) that is endorsed as a guide
to scientific development in the European Union. The proper method of formalization
must still be determined, yet the final outcome must lead to the possibility to use the quantitative approaches to their investigation – their measurement, examination of
interrelationships between subsystems, and the assessment of changes over time, and
later on the impact of policies on their functioning. It is worth mentioning that there is an.
Evolution of emphasis in measurement of innovation, hence also operationalization of
NIS: from issues of spending, to results, to processes, and more currently to knowledge,
intangibles, networks, and system dynamics (Krawczenko, 2011, p.63.
B
References to NIS may also be traced in composite indexes developed mainly
for the purpose of comparisons of levels of innovation (competitiveness, wealth, etc.)
between countries that to some extent may shed light on suggested governmental
policies oriented on innovation enhancement. Composite indexes use a variety of
indicators (data series) to measure innovativeness. In such a way, they indicate which
items of economic performance may contribute to the enhancement of innovativeness.
This may provide policy formulation related suggestions for governmental agencies for
example. Inherently, an assumption is made that some ‘policies’, as measured by
innovativeness indicators, will produce similar results irrespective of specific context in
various countries. This may not be a correct assumption. Results of a literature
overview about innovativeness and the indexes used to measure it, suggest a
substantial overlap and redundancy of items used to assess the level of innovativeness
of countries. Thus, it is worth verifying whether or not a more simplistic composite index
of innovativeness can be formed, eventually enhanced to a broader range of countries,
and if possible translated in such a manner that will facilitate its use to assess
innovation performance of companies.
Composite indexes normally utilize a variety of indicators (data series) to measure
phenomena identified by their authors. Freudenberg (2003) provides a fairly extensive
overview of composite indicators of country performance. Composite indexes consist of
sub-indexes, where all items are equally weighted. This methodology may be
challenged for correctness in terms of selecting (and grouping) indicators. Nevertheless,
numbers should indicate the amount and nature of the factors that describe the idea.
Moreover, several items are highly correlated – they carry the same information with
Proceedings of 9th Asia-Pacific Business Research Conference
5 - 6 November 2015, Bayview Hotel, Singapore, ISBN: 978-1-922069-87-0
regard to statistical significance of results (and country rankings). This methodology, in
principle, is characteristic of all composite indexes examined. Each index captures
some information related to economic improvement. Since these items are correlated, it
should be asked which ones act as stimuli for the development of other ideas.
Moreover, it remains unclear whether countries are innovative because they are rich, or
is it vice-versa and countries with wealth are as a proverbial consequence innovative?
Composite indexes are used in a variety of economic performance and policy areas.
Such indexes integrate large amounts of information into easily understood formats and
can be manipulated to produce desired outcomes. Despite this, there are several
methodological problems regarding the creation of composite indexes (Saisana &
Tarantola, 2002). Quandaries occur when examining the accuracy and reliability of
these indexes. Problems of missing data are imminent, along with the question of index
sensitivity to the weighing of indicators and their aggregation (Freudenberg, 2003, p. 5).
Composite indexes measure complex, dynamic systems, and “many of their properties
emerge from interactions among the entities in them” (Katz, 2006, p. 893). It has been
noted that problems arise when using these indicators due to the conceptual quandary
between allocative efficiency (‘are we doing the right things?’) versus technical
efficiency (‘are we doing things the right way?’). Further dilemmas stem from
problematic definitions and the various taxonomies used to measure the consequences
of the output achieved (eg. Seng Tan, 2004). Albeit these problems, there has been a
noticeable proliferation of composite indexes (eg., Archibugi & Coco, 2005, pp. 179181). With several notable problems, the need and/or usefulness of such diversity
among indexes is questionable. Despite being created with different intentions, and
using varying series’ of data for calculations, these composite indexes actually produce
similar results when raking countries (e.g., Mirchandani, 1999, Nasierowski 2008). This
occurs irrespective of whether they intend to measure the level of innovative capability,
competitiveness, productivity, wealth, or standard of living. To that end, further studies
should examine the specific information content of selected composite indexes, so that
information redundancies are minimized. Albeit these problems, there has been a
noticeable proliferation of composite indexes (eg., Archibugi & Coco, 2005, pp. 179181). With several notable problems, the need and/or usefulness of such diversity
among indexes is questionable. It is argued that these indexes provide highly similar
information, which brings to question the usefulness of such a variety of approaches:
one simple, steady, comprehensive, maybe more useful index is enough. Yet it may be
very difficult for an independent scholar to advocate such a solution, also because it
may deprive vibrant and influential research centers of “public relations” mechanisms
and the ability to create public perceptions. .Also, because of frequent changes in data
series applied to form composite indexes it is close to impossible to use longitudinal
C
While accepting the importance of innovative activities for economic well-being of
nations, it is warranted to examine the efficiency of turning inputs of innovativeness into
outputs that enhance social welfare. Several studies on the efficiency of organizations
(systems, approaches) use the “best practice frontier” concept. Here the distance from
such a frontier represents inefficiency: in other words the inability to produce maximum
output from given inputs. Parametric approaches (e.g., regression methods) are used
to estimate parameters of technical efficiency. However, many elements, such as multico linearity, model misinterpretation and measurement error, the use of multiple outputs,
and omitted variables, can weaken the precision of these parameter estimates (Chapple
Proceedings of 9th Asia-Pacific Business Research Conference
5 - 6 November 2015, Bayview Hotel, Singapore, ISBN: 978-1-922069-87-0
et. al., 2005). Consequently, it may be more appropriate to depart from a cursory
examination of a ratio of inputs to outputs (e.g., EIS, 2005 – till IUS 2015, Sajeva et.al.,
2005), and examine “best practice frontiers” from the viewpoint of contemporary economic concepts using the non-parametric DEA model in order to estimate the Farrell Input
–Saving Measure of Technical Efficiency. This means that the measure of technical
efficiency is examined as the greatest proportion of inputs which can be reduced and
still produce the same output (Färe & Grosskopf, 1998a, p.14). Constraints of such an
approach include the requirement of a specific ratio of observations (countries
considered) to number of variables (indicators) used to describe the situation.
3.2.
Micro-economic economic perspective to innovations – some aspects to be
investigated
Consequently in the myriad of studies on entrepreneurship and innovation in SME it is
an unwritten rule not to argue about means of measuring levels of innovation. Instead
perceptions of innovativeness (keeping in mind ambiguous interpretations of the notion)
are accepted as a basis for assessments. Frequently, there are no suggestions relative
to the means for enhancements of “entrepreneurial orientation” at an institutional level.
Some problems seemed to originate mainly from the lack of precise definitions of the
studied objects. Means to resolve the problems have not been found, since these are
beyond the impact of independent researchers. Keeping the above items in mind, as
well as quandaries with interpretation of innovativeness, creativity, entrepreneurship,
especially with respect to SME, the following conceptual framework (Chart 1) for a
discussion about examining aspects of innovativeness in SME may apply (Nasierowski,
2007, CDRom).
Chart 1: A conceptual framework for discussion about innovativeness of SME
BARRIERS TO INNOVATIVENESS / IMPLEMENTATION OF INNOVATION
Governmental policies (grants, brochures, training)
Management (skills, attitudes, contacts)
Location of the business (which is associated with ease of access to
expertise, skills, distribution network etc.), intensity of competition,
existing infrastructure, geographic/distance related issues);
Access to: capital/funds;
technical/engineering
/legal/accounting expertise; good (skilled, motivated)
employees
distribution network
(
EVENT / ACTION (
IMPROVEMENT
BUSINESS SUCCESS
(
innovation
(
productivity
better competitive position
(
entrepreneurship (
quality
higher market share
(
creativity
(
lower costs
higher profitability
(
STIMULATORS OF INNOVATIVENESS
are classified similarly as barriers to
innovativeness. Yet, please note that stimulators are NOT a ‘reverse’ side of barriers. Let
us assume that factor “x” is identified as a barrier. Removing this barrier does not mean
Proceedings of 9th Asia-Pacific Business Research Conference
5 - 6 November 2015, Bayview Hotel, Singapore, ISBN: 978-1-922069-87-0
that a stimuli towards innovativeness has occurred. This is similarly to speeding in a
70km/hour zone, in that if one drives below 70 km/hour one will not be rewarded. Furthermore, removing a barrier of 70km/hour may not stimulate many to drive 50 km/hour.
Likewise, removing barriers to innovate will not necessarily stimulate innovations. Moreover, one should note that some barriers are considered constraints that cannot be
removed. There are limited opportunities to change the location of the business. Also, it
may be difficult, for example, to cope with issues of outflow of professionals and skilled
labor. However, innovation may also occur when a disadvantage is changed into an
advantage.
For example, detailed studies are suggested, so that their results allow to better
undertaken whether or not the main problems relate to the following hypotheses:
H1 - there are too many projects carried out, and too few resources (the
congestion phenomenon);
H2 - the quality of undertaken projects is low (these are frequently “mediocre”,
that may result from the “me too” approach, and the search for improvements in
imitations), that will be associated with quandaries related to the degree of novelty;
H3 - there are serious flaws in application of significant innovations (the result of
poor management, and reactive and random goal setting, for example).
Such studies will call for questionnaire type approach, and may be difficult to organize
because of several issues:
- unwillingness of companies to reveal data and information about their innovation
projects (which indeed may be regarded confidential);
- availability of funds and other resources to carry out the study;
- a vast variety of projects (economic sector, duration, costs), and variety of types
of enterprises (diversity in experience with innovations, organizational culture,
used strategies).
An alternate approach – case studies – will not be free of the above constraints, yet will
add problems with generalizations of conclusions.
4. Instead of Summary
Results of literature analysis related to innovations, persistently suggest that even
though discussion is about similar phenomena, there is a gap between macro and micro
perspectives of innovations. In order to examine these dichotomies in more detail the
following may be of assistance:
Establishing practical, user friendly, universal, rooted in easily available (and quantifyable) data series, prone to be used as policy making guidance and comprehensive
composite indexes of the level of innovativeness. As a cross-validation of such an
index can be done through comparison of rankings of countries in terms of innovations
drive it produces with rankings exhibited by EIS. Thus, there will be some consistency
regarding results developed, with what is believed (maybe incorrectly) to be an indicator
of level of innovativeness for the purpose of comparative analysis;
Identification of efficiency of innovation policies used in different countries (here:
efficiency of turning inputs into outputs). This can be achieved, for example, using
“Farrell Input-Saving Measure of Technical Efficiency” and DEA method;
Proceedings of 9th Asia-Pacific Business Research Conference
5 - 6 November 2015, Bayview Hotel, Singapore, ISBN: 978-1-922069-87-0
Based on assessment of efficiency the key points for policies oriented on enhancing
innovativeness can be established. These key points, along with the results of analysis
of detailed innovation policies, may lead to the identification of “Best Management
Practices in Innovations” (BMPI) applicable to the specific context.
If some stability while measuring innovativeness is achieved, longitudinal studies may
be undertaken cross-validating assessment of accuracy of procedures and policies.
Certainly the problem of isolation results of these approaches from market forces, for
example, will remain to be resolved. Thus, there are still several important to economic
progress topics in the field of innovativeness which exploration is warranted.
If attempts to replicate a macro-economic type of composite index of innovation is replicated with an index of enterprises’ innovative efforts, then several suggestions for
improvement of NIS can be transferred to the micro-economic level, keeping in mind
sector specificity. Examination of this assumption will be carried out keeping in mind the
substantial differences in innovation and R&D patterns of different economic sectors,
companies’ experience with innovations, their size and organizational culture, and many
other contextual elements. Details with respect to how to handle differences/ complexity
of the impact of these contextual variables also forms a part of the research effort.
It is at times suggested that composite indexes may serve to guide policy settings.
However, data series used in these composite indexes change almost every year.
Consequently, there is no possibility of identifying whether policy changes have
contributed to the improvement of desired operational outcomes.
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