Beruflich Dokumente
Kultur Dokumente
DOI 10.1007/s10479-015-1873-x
1 Introduction
The concepts of innovation, productivity, and competitiveness have received much attention
among managers and policy-makers as a result of their importance to economic development.
Although these concepts have been widely studied from different perspectives, they appear
rather complex and vague, and thus no agreed definitions may be found. In fact, the alterna-
Evangelos Grigoroudis
vangelis@ergasya.tuc.gr
Elias G. Carayannis
caraye@gwu.edu
School of Business, The George Washington University, 2201 G Street, NW, Duqus Hall,
Washington, DC 20052, USA
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tive measurement approaches may serve also as definitions of the aforementioned concepts,
leading to different assessments.
While the notion of productivity is clear at the firm or the country level, since it may be
generally defined as the value of the output produced by a unit of labor or capital, national
competitiveness differs according to the examined level or perspective (Kao et al. 2008). Thus,
competitiveness at the firm level focuses on market share, while national competitiveness may
be considered as the capability of national economies to achieve sustained economic growth,
by efficiently allocating available resources (e.g., human and natural resources, capital) and
having the appropriate structures, institutions, and policies. In this context, competitiveness
of nations is defined as how nations create and maintain an environment which sustains the
competitiveness of its enterprises (IMD 2003) while numerous other alternative definitions
may be found in the literature (see for example Krugman 1994; Carayannis and Provance
2008; WEF 2012). On the other hand, innovation appears as an economic or social term,
focusing on product or process changes. For example, Drucker (1985) considers innovation
as change that creates a new dimension of performance, or as changing the yield of resources
and as changing the value and satisfaction obtained from resources by the consumer.
The literature shows that there are several alternative measures of innovation, productivity, and competitiveness, depending on the level and the purpose of the analysis. In several
cases, significant overlaps may be observed, mainly because these concepts are inherently
linked (Carayannis and Sagi 2001, 2002; Shane 2004; Carayannis and Grigoroudis 2012)
and thus, researchers focus on studying their drivers and outcomes, e.g., in a cause-andeffect way (see for example Jansen 2006). The previous limitations justify the necessity of
studying innovation, productivity, and competitiveness in an integrated framework, giving
emphasis on their potential interrelations, since innovation-driven competitiveness is critical
for a countrys long run economic performance in todays knowledge-based global economy.
The main aim of the paper is to propose a methodological measurement framework based
on multiobjective mathematical programming in order to study the linkage among national
innovation, productivity, and competitiveness and discover potential performance patterns.
The proposed approach is a regression-based MONLP that extends the work of Carayannis
and Grigoroudis (2012), estimating aggregated national innovation, productivity, and competitiveness (IPC) indices, based on a set of relevant indicators that describe the various aspects
of these concepts. The main characteristic of the model is that, due to its multiple objective
nature, it both minimizes the estimation errors and maximizes the correlation between the
aggregated IPC indices. Moreover, the proposed model is a nonparametric approach, and
thus no assumptions for the statistical properties of the examined variables are posed. Also,
the weights of the aggregation formula do not follow an arbitrary equal weighting scheme,
but they are estimated based on the previous multiple objectives. Other important advantages
include the flexibility of the model to consider additional desired properties for the examined variables and its ability to perform a dynamic analysis based on complete time series
data.
2 Background
2.1 Measuring innovation, productivity, and competitiveness
Alternative methods for measuring innovation include approaches based on both single (e.g.,
R&D expenditures, number of patents) and composite indicators. Since a single indicator
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can provide only a limited view of such a broad concept, the role of composite indicators has
been significantly increased in recent decades (Paas and Poltime 2010). In this context, the
relevant literature reveals two major approaches:
Evaluation of national performance and ranking of countries;
Analysis of national innovation systems.
The first approach mainly focuses on a comparative analysis of different aggregated innovation measures, while the second approach characterizes only a particular counter and puts
emphasis on the factors that may impact innovation performance.
The most widely used composite innovation index is provided by the European Innovation
Scoreboard (EIS), which has been introduced as part of the Lisbon strategy and aims to
measure, on a yearly basis, the innovation performance of member countries (Hollanders and
van Cruysen 2008). The EIS consists of three main blocks, 7 dimensions, and 29 indicators.
The first block (enablers) refers to the main drivers of innovation that are external to the firm
and includes the dimensions of human resources (availability of high-skilled and educated
people) and finance and support (availability of finance for innovation projects and support of
governments for innovation activities). The second block (firm activities) captures innovation
efforts at the firm level, including firm investments (investments firms make in order to
generate innovation), linkages and entrepreneurship (entrepreneurial collaboration efforts),
and throughputs (Intellectual Property Rights and Technology Balance of Payments flows).
Finally, the last block (outputs) focuses on the outputs of firm activities and includes the
dimensions of innovators (number of firms that have introduced innovations onto the market
or within their organizations, covering technological and non-technological innovations),
and economic effects (economic success of innovation in employment, exports and sales). A
detailed presentation of these metrics can be found in Pro Inno Europe (2010).
It is important to note that the EIS framework has been significantly modified over years
and it has been recently transformed into the Innovation Union Scoreboard (IUS) in order to
monitor the implementation of the Europe 2020 Innovation Union flagship (Pro Inno Europe
2011). For example, the first version of 2000 was based on 16 indicators and covered 17
countries, while the version of 2008 had been extended to 29 indicators and 37 countries.
These revisions try to overcome the major criticism of the EIS methodology, including
mostly the choice of dimensions and indicators. In addition, the updated framework captures
new forms of innovation (e.g., services, open innovation) and is able to provide an overall
innovation performance for each country (see Hollanders 2009 for an overview of the changes
in the EIS over time). In any case, these revisions show the ongoing debate on defining
innovation and justify the lack of a universally accepted constant framework for measuring
it.
Historically, the measurement of productivity was initially based on a production function
context and linked with economic growth, while current research integrates the theory of the
firm, the index number theory, and available national accounts (OECD 2001). Alternative
productivity measures may be found in the relevant literature (see for example Diewert
and Nakamura 2007). These different productivity measures are classified according to the
following criteria:
Number of factors: This categorization includes single factor productivity, which relates
a measure of output to a single measure of input, and multifactor productivity, where a
bundle of inputs is considered.
Type of output measure: The alternative categories refer either to gross output or value
added.
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It should be noted that besides labor and capital, additional intermediate inputs may also
be considered. Many scholars argue that labor productivity is the most useful productivity
measure because it is related with the most important factor of production, it can be easily
measured, and it is a key determinant of living standards (OECD 2001). However, it captures
only partially the different aspects of this concept, and thus multifactor productivity is usually
considered. As noted by Diewert and Nakamura (2007), although it is impossible to measure
all inputs at a national level, estimations and approximations may be considered.
The concepts of productivity and competitiveness seem inherently related, given that
competitiveness is considered as the capability of national economies to achieve sustained
economic growth, by efficiently allocating available resources (e.g., human and natural
resources, capital). In addition, WEF (2012) defines competitiveness as the set of institutions, policies, and factors that determine the level of productivity of a country. Thus, in
several cases, productivity is considered as the only meaningful concept of national competitiveness (Porter 1990), and as a result the Gross National Product (GNP) per capita may be
used as a reliable performance index, only when a single measure should be considered.
The most important efforts for developing a competiveness measurement framework refer
to the Global Competitiveness Index (GCI) developed by the World Economic Forum (WEF)
and the World Competitiveness Yearbook (WCY) provided by the International Institute for
Management Development (IMD).
The CGI consists of three subindices that cover the basic requirements (institutions,
infrastructure, macroeconomic environment, health and primary education), the efficiency
enhancers (higher education and training, goods and labor market efficiency, financial market environment, technological readiness, market size), and the innovation and sophistication
factors (business sophistication, innovation). It also includes many components that measure
different aspects of competitiveness. These are grouped into 12 pillars of competitiveness
that contain a total of 111 detailed indicators, and the GCI is estimated based on a weighted
average formula.
The previous subindices are able to assess the most important factors for different types
of economies, according on the economic theory of stages of development. In particular, the
CGI adopts different weighting schemes depending on the development stage of a national
economy (i.e., factor-driven, efficiency-driven, or innovation-driven).
Similarly, the WCY estimates an overall national competitiveness ranking of countries
based on four main factors that include economic performance, government efficiency,
business efficiency, and infrastructure (IMD 2010). These factors are divided in into 20
sub-factors, which in turn comprise more than 300 competitiveness criteria. The main
characteristic of the WCY is the emphasis given to the firm level, since the considered
factors and criteria are oriented to a national environment that enhances the ability of
firms to compete domestically or internationally (IMD 2010). It is important to note that
besides statistical data, IMD uses survey data drawn from annual executive opinion surveys.
The aforementioned frameworks show that, in most cases, the measurement techniques
adopted by the major IPC barometers are mainly based on simple estimation techniques,
since a weighted average formula is usually adopted. Different aggregation methods may
also be found in the relevant literature, but they appear to have important limitations (see
for example Nardo et al. 2005; Hollanders and Arundel 2007; Grupp and Schubert 2010).
However, composite indicators are still the best tool available for analyzing such complex
concepts (Paas and Poltime 2010). In addition, the interrelations among these concepts are
rather strong. All these justify the necessity of developing new measurement frameworks
that are able to study together IPC composite indices.
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3 Proposed approach
3.1 Multiobjective programming model
The proposed model adopts the modeling approach of the main IPC barometers presented in
Sect. 2.1. In this context, the model assumes that national IPC are aggregated measures over
a set of relevant performance indicators, and thus they can be considered as latent variables.
In addition, the proposed model assumes that these aggregated measures are interrelated, as
discussed in Sect. 2.2.
Taken into account the previous two research objectives, the following multiobjective
optimization problem may be formulated:
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Government
Influences by policies,
exchange rates, WTO
membership
De
fin
pr es p
og o
ram lic
s y,
SOL
GDP/Capita/Industry
%GDP
Competitiveness
Productivity
Innovation
Industry
Competitors
Suppliers
Defines
Attracts
ROI
Patents
Productivity
Innovation
Internal R&D,
Development Labs
le
K
no
w
Re
su
lts
Consortia,
Universities, Applied
Research Labs
dg
e
Sales
Competitiveness
Knowledge creation
Knowledge diffusion
Defines
Innovation
Supports
%GDP
Productivity
Supports
Sales/Employee
Defines
Supports
Sales
Competitiveness
Membership
Buyers
Trades and
competes
Defines
Supports
s
ce
en
flu
In
Firm
Value chain
Marketability
[max] F1 = (I, P, C)
[min] F2 = ( , , )
subject to
I = f 1 (i j ) +
j = 1, . . . , J
P = f 2 ( pk ) + k = 1, . . . , K
C = f 3 (cm ) + m = 1, . . . , M
(1)
where I, P, and C are the aggregated measures of innovation, productivity, and competitiveness, respectively, i j is the of innovation indicator j, pk is the productivity indicator k, cm
is the competitiveness indicator m, , , and are error terms, f i and are aggregation
functions, and is a measure of interrelation.
The optimization problem (1) estimates the overall performance indices (i.e., aggregated
measures) of innovation, productivity, and competitiveness (I, P, and C), based on the sets
of relevant indicators i j , pk , and cm with the maximum interrelation among I, P, and C and
the minimum estimation errors . It should be noted that although i j , pk , and cm appear as
independent variables in f i , they are interrelated through .
In order to further develop the optimization problem (1), the functions , , f i should be
determined. In particular, the correlation function may serve as a measure of interrelation ,
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(Mirkin 2011), while may be modeled using a simple aggregation form. Regarding f i , a
linear function may be adopted, since the aggregation of i j , pk , and cm into I, P, and C is
not known in detail. However, linear aggregation forms may also be adopted by the major
IPC barometers, as presented in Sect. 2.1. In addition, , , and may be modeled using a set
of double error variables (i.e., overestimation and underestimation error) in order to adopt a
goal programming approach. In this case, the complexity of the optimization problem may
be reduced, since error variables are nonnegative.
Finally, in order to apply a linear form in f i and have a comparable set of indicators,
i j , pk , and cm should be normalized. A min-max normalization formula is used in this case,
which is the most common normalization approach (Myatt 2007). For increasing indicators
(larger-the-better), the following normalization formula is used:
xs =
X s X min
X max X min
(2)
where X s is the value of a particular indicator for country s, xs is the normalized value of
X s , X min = min {X s } and X max = max {X s }. In the case of a decreasing indicator (smallers
s
the-better), the previous normalization formula should be written as:
xs =
X max X s
X max X min
(3)
Assuming that data from S countries are available and taking into account the aforementioned
principles and assumptions, the optimization problem (1) may be formulated through the
following multiobjective mathematical problem:
subject to
Is =
Ps =
Cs =
J
j=1
K
s=1
a j i js s+
k=1
M
+ s
bk pks s+ + s
m=1
dm cms
s=1
s+ + s
s = 1, 2, . . . , S
(5)
where Is , Ps , and Cs are the aggregated indices of IPC for country s, i js is the value of
innovation indicator j for country s, pks is the value of productivity indicator k for country s, cms is the value of competitiveness indicator m for country s, a j , bk , and dm are the
regression coefficients, s+ and s are the overestimation and the underestimation errors,
respectively, for the innovation regression equation, s+ and s are the overestimation and
the underestimation errors, respectively, for the productivity regression equation, s+ and s+
are the overestimation and the underestimation errors, respectively, for the competitiveness
regression equation, S is the total number of countries, and Corr is the Pearson correlation
coefficient.
The optimization problem (4), (5) is a multiobjective nonlinear program (MONLP), having
as constraints the regression equations for the competitiveness, productivity, and innovation.
Each one of these regression equations assumes that the evaluated aggregated measure is a
weighted sum of relevant performance indicators. In particular, for the regression coefficients,
the following normalization properties are assumed:
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a j = 1,
j=1
bk = 1,
dm = 1
(6)
m=1
k=1
Equation (6) gives the ability to estimate normalized aggregated measures; as already mentioned, i js , pks , and cms are normalized in [0, 1] and thus, Is , Ps , Cs [0, 1]. In addition,
given Eq. (6), the estimated regression coefficients a j , bk , and dm represent the relative contribution of i js , pks , and cms in Is , Ps , and Cs , respectively. Consequently, the MONLP takes
the following final form:
subject to
s=1
s=1
(8)
where e is a small positive number assuring that i js , pks , and cms have a positive impact on
Is , Ps , and Cs , respectively.
The proposed model is a mathematical programming approach to canonical correlation
analysis (CCA), which is a statistical tool for identifying and measuring the associations
between two multidimensional variables (Hair et al. 1995; Tabachnick and Fidell 1996).
In particular, the proposed approach is a MONLP is similar to two-stage CCA, since it
considers three regression equations and two optimality criteria. The first objective function
(F1 ) maximizes the overall interrelation among IPC, where Ps serves as a mediator and
there is no order in these relations. The second objective (F2 ) minimizes the overall sum
of absolute estimation errors, and since a goal programming approach is adopted, we have
s+ s = 0, s+ s = 0, s+ s = 0 s.
Mathematical programming approaches have been proposed for modeling CCA problems
(see for example Tofallis 1999), emphasizing the flexibility that constrained optimization
models may offer (e.g., addition of constraints for fitted coefficients). This flexibility is the
main advantage of the proposed approach, since it may consider additional desired properties
for the examined variables (see for example constraints (6)). Another important advantage is
that the MONLP (8) is a nonparametric approach, given that no assumptions for the statistical
properties of the examined variables are posed.
Although several multiobjective methods may be applied for solving MONLP (7), (8), in
this study a compromise programming approach is adopted. The main aim of compromise
programming, introduced by Zeleny (1974, 1982) and Yu (1973, 1985), is to determine a set
of efficient solutions with the nearest distance to an ideal solution (i.e., solution where all
objectives are optimized). Usually, the following p-metrics are used as a distance function:
n
1/ p
F Fi p
i
min L p =
wi
(9)
Fi Fi
i=1
where Fi is the i-th objective function, Fi and Fi are the ideal (i.e., the optimum value of Fi
without considering the other objective functions) and the anti-ideal solution (i.e., the worst
value of Fi when the other objective functions are optimized) of the i-th objective function,
respectively, wi is the weight of the i-th objective function, p is the topological metric, and
n is the number of objective functions.
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Based on the aforementioned modeling approach, the final optimization problem considered in this study has the following form:
F F1
F F2
Constraints (8)
(10)
The optimization problem (10) considers the L 1 -norm (Manhattan norm) and assumes that
the relative importance of the two objective functions is equal (w1 = w2 = 0.5). Thus,
the applied compromise programming approach is similar to the global criterion method
in multiobjective optimization. A detailed review of alternative multicriteria optimization
approaches may be found in Ehrgott (2005) and Ehrgott and Wiecek (2005).
123
These dimensions are measured through the following indices: (14) Labor productivity (GDP
in purchasing power standards), (15) Gross value added at factor cost (per capita).
The set of competitiveness indicators, following the GCI framework (WEF 2012) consists of three main performance dimensions and 10 indices. The first dimension considers
infrastructure, which is a basic competitiveness requirement, and consists of the following
indices: (16) Internet users (per 100 population), (17) Mobile Cellular subscriptions (per
100 population), (18) Telephone lines (per 100 population). The second dimension takes
into account economic variables and consists of the following indices: (19) GDP per capita
(PPP, current international $), (20) GDP growth (annual %), (21) Inflation rate (consumer
prices, annual %). The third dimension refers to the national macroeconomic environment
and serves also as a basic competitiveness requirement. It consists of the following indices:
(22) Balance of trade (exports-imports), (23) Interest rate spread (lending rate minus deposit
rate), (24) Central government debt (% of GDP), (25) Unit labor cost, total economy (annual
%).
Based on this set of 25 IPC indicators, a database containing data of 19 countries for
the period 19982008 has been developed. The countries examined in this study include:
Austria, Belgium, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary,
Italy, Norway, Poland, Portugal, Ireland, Slovakia, Spain, Sweden, Switzerland, and United
Kingdom. All but the indicators referring to inflation rate, interest rate spread, government
debt, and labor cost are larger-the-better. It should be emphasized that all these indicators are
measured in a relative scale (e.g., as % of GDP or population), and thus it is valid to apply
the normalization Eqs. (2) and (3) in order to develop a fully comparable set of measurement
indicators.
4 Results
4.1 Overall results
Based on the assessed set of performance indicators, the proposed multiobjectice mathematical program is applied on the aforementioned set of 19 countries. The NLP (10) is solved
for each year of the examined period 19982008, and thus a set of overall IPC indices is
estimated for each country and each year.
The fitting of the model may be measured using the objectives functions considered,
i.e., the absolute estimation errors and the correlation coefficients among IPC. According to
the estimated results, the fitting of the model is relatively high: the average absolute error
for the IPC regression equation (s+ , s , s+ , s , s+ , s+ ) is 0.0331, 0.0073, and 0.0012,
respectively (average over all countries and years). Moreover, the average correlation between
the aggregated innovation and productivity indices Corr (Is , Ps ) is 0.961 (average over all
countries and years), while the average correlation between the aggregated competitiveness
and productivity indices Corr (Ps , Cs ) is 0.984. As a result, the average correlation between
the aggregated competitiveness and innovation indices Corr (Is , Cs ) is 0.950 (average over
all countries and years).
The performance map presented in Fig. 2 provides an overview of the estimated aggregated
IPC indices. This performance map is based on the average values for 19982008 and presents
the relative ICP scores in order to standardize the graph and avoid comparability problems
(see details in Grigoroudis and Siskos 2002, 2010). Thus, each country score is compared
to the scores of the other countries. Since three series of aggregated indices are available,
123
High
NO
CH
IE
DK
SE
Productivity
AT
DE
ES
GR
HU
Low
FR BE
PL
Low
UK
FI
IT
PO
CZ
SK
Innovation
High
Fig. 2 has the form of a bubble chart, where the horizontal and the vertical axes refer to the
average overall innovation and productivity scores, respectively, and the size of bubbles is
proportional to the average overall competitiveness score.
As expected, Fig. 2 shows that high (low) innovation scores correspond to high (low)
productivity and competitiveness performance, since all countries are located in the upper
right or the lower left quadrant, while the size of bubbles (competitiveness) increases as both
innovation and productivity performances increase. These findings show that there are no
significant gaps among IPC and are justified by the main assumption of the model, i.e., the
interrelation among these latent variables. In addition, these results are supported by the major
innovation and competitiveness barometers; Finland, Norway, Sweden, and Switzerland are
ranked among the top countries in the EIS and the GCI, while the performance of Greece,
Slovakia, Portugal, and Poland is below of the European average (Pro Inno Europe 2010,
2011; WEF 2012).
However, important differences among the examined European countries may be found.
Table 1 presents the aggregated IPC indices for different country categorizations. The first
categorization refers to the innovation performance according to the EIS (2010, 2011), and
includes the innovation leaders (Finland, Sweden, and Switzerland), the next best performers
(Austria, Belgium, Denmark, France, Germany Norway, Ireland, and United Kingdom), the
followers (Czech Republic, Hungary, Italy, and Spain), and the lagging countries (Greece,
Poland, Portugal, Slovakia). Other alternative categorizations presented in Table 1 are based
on geographic or income criteria (high income $40,000$53,000 GDP per capita; upper
medium income $35,000$38,000 GDP per capita; lower medium income $26,000$30,000
GDP per capita; low income $19,000$23,000 GDP per capita).
The main finding of Table 1 is that innovation performance, as well as income, significantly affects all three aggregated IPC indices. In addition, the geographic categorization
clearly shows a Europe of two speeds. Northern and Western European countries appear to
have higher performance in all three IPC indices, while the performance of the Northern
and Eastern European countries is significantly weaker, particularly regarding the aggregated productivity and innovation indices. According to WEF (2013), although all European
countries have been improved in terms of aggregated prosperity since the 1980s, the path
of Northern and Southern European countries has been diverging up until 20082009. This
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Innovation index
Productivity index
Competitiveness index
Innovation leaders
0.567
0.710
0.681
0.464
0.653
0.625
0.222
0.224
0.349
Lagging
0.150
0.110
0.248
Northern Europe
0.513
0.700
0.671
Western Europe
0.467
0.631
0.602
Southern Europe
0.220
0.301
0.393
Eastern Europe
0.151
0.033
0.204
High income
0.534
0.764
0.711
0.457
0.589
0.581
0.223
0.274
0.384
Low income
0.148
0.060
0.213
High
Followers
Employment
Performance
Macroeconomic
Labor productivity Environment
Finance
Infrastructure
Exports & Patents
Economy
Low
Low
Importance
High
Fig. 3 Relative importance/performance map (average over all countries and years)
divergence looks similar to the EUUS gap and has been widening after the recent financial
crisis (WEF 2012, 2013). Since this study examined the period between 1998 and 2008, the
observed inability of some countries to innovate and compete internationally is consistent
with the ongoing sovereign debt crisis in Northern Europe and Ireland.
In order to identify the strong and the weak points of IPC, an importance/performance
diagram is developed, as shown in Fig. 3. This map presents the importance of the IPC
components, as measured by the regression coefficients, in the horizontal axis, while the
vertical axis refers to the performance value of the IPC components. It is important to note
that, similarly to Fig. 3, all values have been standardized in order to have fully comparable
results. Thus, this importance/performance map shows the relative strong and weak points
of the examined components. Moreover, the presented importance is not related to the true
significance of the IPC components, but it rather refers to their contribution in the aggregated
IPC indices, so as to maximize the overall interrelation among IPC.
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The results of Fig. 3 show that there is a significant gap in all IPC components during the
examined period. Although the contribution of Exports & Patents and Human Resources &
Research Systems is high, their performance appears relatively low. In addition, Finance
also has a relative low performance, and thus the observed gap is mainly focused on the
components referring to innovation enablers. This is rather unfavorable, since the enablers
are the main drivers of innovation and may affect the performance of other components, due to
the assumed IPC interrelations. This result is consistent with recent findings underlining that
the EU underperforms against other advanced economies, particularly in terms of innovation
capacity and higher education and training (WEF 2013). A similar gap is also observed for the
productivity components. While Labor Productivity is located in the upper-left quadrant
(low importance/high performance), Gross Value Added appears as a weakness (high
importance/low performance) and justifies the recent efforts of EU policymakers to develop
a long-term and visionary strategy for the European economy. As noted in WEF (2013),
many emerging-market economies (e.g., BRIC economies) have managed to improve their
competitiveness, increase their pressure on value added activities in Europe, and sometimes
overtake some of the European economies. Finally, the gap in the competitiveness components
reveals that Economy is a weakness, while Macroeconomic Environment has a relatively
higher performance, since it is located in the upper-left quadrant. Indeed, the recent results
emphasize that the macroeconomic environment is the only pillar of the CGI methodology
with a performance higher in the EU27 than in the US (WEF 2013).
The aforementioned gaps may also be observed in the examined countries, particularly if
the different innovation performance country groups are considered. As noted by Pro Inno
Europe (2011), innovation leaders share a number of strengths in their national research
and innovation systems with a key role of business activity and public-private collaboration.
The most important finding from all these studies is that an overall higher performance is
usually a result of a balanced performance in the examined components. Regardless of the
distinctive characteristics of each country, this means that the variability of drivers/results,
enables/outcomes or lead/lag indicators should be relatively low.
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100%
100%
80%
80%
60%
60%
40%
40%
20%
20%
0%
1998
1999
2000
2001
Innovation
2002
2003
Productivity
2004
2005
2006
2007
2008
0%
1998
1999
Competitiveness
2000
2001
Innovation
Followers
100%
80%
80%
60%
60%
40%
40%
20%
20%
1999
2000
2001
Innovation
2002
2003
Productivity
2003
Productivity
2004
2005
2006
2007
2008
2007
2008
Competitiveness
Lagging
100%
0%
1998
2002
2004
2005
2006
Competitiveness
2007
2008
0%
1998
1999
2000
2001
Innovation
2002
2003
Productivity
2004
2005
2006
Competitiveness
The evolution of IPC performance in the examined period may be studied through a series
of dynamic performance maps, as shown in Fig. 5 (see also Carayannis and Grigoroudis 2012).
Similarly to Fig. 2, these maps present the average overall innovation and productivity scores
in the horizontal and the vertical axis, respectively, while the size of bubbles is proportional
to the average overall competitiveness score. The IPC scores are also standardized (i.e., the
score of each year is compared to the scores of the other years).
Figure 5 presents the relative performance of the different country groups according to
their geographic area categorization. The main aim of this analysis is to discover potential
performance patterns in the examined period. The main findings of Fig. 5 may be summarized
as follows:
The Northern European countries seem to follow a clockwise path, starting from the
lower-left quadrant (low innovation/low productivity) and ending at the lower-right quadrant (high innovation/low productivity). In addition, their competitiveness performance
appears relatively constant in the examined years. These results show that the Northern European countries managed to improve their relative innovation performance and
sustain their competitiveness levels during this period.
Regarding the Western European countries, generally, the observed path starts mainly
from the upper-left quadrant (low innovation/high productivity) and ends at the lowerright quadrant (high innovation/low productivity). Moreover, their competitiveness
performance appears relatively constant between 1998 and 2008. Overall, it seems that
the Western European countries managed to improve their innovation performance, sus-
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2004
Northern Europe
High
High
1999
Western Europe
1998
2003
Productivity
Productivity
2000
2002
2000
2001
1999
2006
2003
2001
2002
2004
2007
2007
2008
2008
2006
1998
High
High
Innovation
Southern Europe
2004
1999
2003
Low
High
Innovation
High
Low
2005
Low
Low
2005
Eastern Europe
2004
1998
2003
Productivity
Productivity
2008
2001
2000
2002
2007
2005
2006
1999
2007
Innovation
Low
Low
1998
2000
2008
Low
2006
2005
2002
2001
High
Low
Innovation
High
tain their competitiveness levels, while their productivity received pressure during this
period.
In the case of Southern European countries, a counterclockwise path may be observed,
starting from the upper-right quadrant (high innovation/high productivity) and ending at
the lower-right quadrant (high/innovation/low productivity). Also, their competitiveness
seems to decrease during the last years, particularly after 2005. As an overall result,
it seems that although these countries managed to sustain their innovation levels, their
productivity and competitiveness performance have been weakened.
Compared to Western Europe, the opposite path may be observed for the Eastern European countries: lower-left quadrant (low innovation/low productivity) upper-left
quadrant (high innovation/high productivity). This result may be justified by the significant improvement margins in their innovation and productivity performance. However,
the competitiveness of this particular country group seems to vary during this period.
The previous findings show that some European countries were able to follow a more sustainable path during the examined period. This means that these countries are able to improve
or at least hold their position in a global competitive environment. Given the financial crisis
of 2008, which leads to the 20082012 global recession and the recent European sovereign
debt crisis, this result is very important. As already mentioned, the diverging IPC performance within Europe reveals the significant difficulties faced by several European countries,
particularly in Southern Europe, to lift their economies onto a soundly positive growth path
(WEF 2013). The previous dynamic performance maps are able to justify a Europe of two
speeds based on geography, income, and innovation performance.
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123
0.222
0.150
0.513
0.467
0.220
0.151
0.534
0.457
0.223
0.148
Followers
Lagging
Northern Europe
Western Europe
Southern Europe
Eastern Europe
High income
Low income
0.567
0.464
0.014
0.060
0.589
0.274
0.010
0.764
0.011
0.025
0.033
0.301
0.012
0.631
0.003
0.700
0.009
0.028
0.110
0.224
0.006
0.009
0.653
0.710
0.013
0.025
Performancea
Productivity
Performancea
Progressb
Innovation
Innovation leaders
Country groups
0.625
0.004
0.581
0.014
0.213
0.384
0.015
0.015
0.711
0.204
0.003
0.115
0.393
0.602
0.018
0.020
0.671
0.248
0.004
0.005
0.349
0.681
0.009
0.017
Performancea
Competitiveness
Progressb
0.304
0.009
0.019
0.006
0.505
0.002
0.016
0.009
0.131
0.024
0.012
0.012
Progressb
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Catching up
Low
High
NO
CZ
IE
HU
DE
GR
SK
CH
FI
UK
PL
SE
DK
BE
ES
AT
FR
IT
Losing momentum
High
Catching up PL
Low
High
SK
HU
CZ
GR
PO
IT
ES
UK BE SE DE
FI FRAT DK IE
CH
NO
Losing momentum
High
challenge for improving or sustaining growth (see for example WEF 2013; Pro Inno Europe
2011; European Union 2012).
5 Concluding remarks
National innovation, productivity, and competitiveness are complex concepts having different
measurement layers and aspects. Although there are several approaches that study these
concepts, there is no universally accepted definition and in many cases several overlaps may
be observed (Carayannis and Grigoroudis 2012). Thus, the existing measurement approaches
serve also as definitions of these terms and lead to different assessments. The main aim of
this paper is to propose a methodological measurement framework based on multiobjective
mathematical programming in order to study the linkage among national IPC and discover
potential performance patterns.
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High
HU
SK
CZ
PO
PL
GR
IT
NO
FR
UKDE IE
ES BE FI DKAT SE
CH
Losing momentum
High
The proposed approach is a regression-based MONLP model that estimates a set of aggregated national competitiveness, productivity, and innovation indices. The model assumes that
these aggregated measures are interrelated, and thus the considered objectives maximize the
correlation between these indices and minimize at the same time the sum of absolute estimation errors. In addition, the estimation takes into account the national performance in a
set of specific indicators for each one of the IPC variables. It should be emphasized that the
aim of the proposed approach is not to develop a prediction model, providing absolute IPC
measures. This may be meaningless, since these variables are inherently vague.
The proposed model may be considered as an alternative to the two-stage CCA, considering multiple regression equations and optimality criteria. CCA is a statistical tool aiming
to identify and measure the associations between two multidimensional variables. However,
CCA appears to have several limitations, like weak assumptions for normality or estimation
problems due to homoscedasticity of multicollinearity among variables (Hair et al. 1995).
The proposed approach may overcome some of these disadvantages, since it is a nonparametric approach. Other important advantages include the flexibility of the model to consider
additional desired properties for the examined variables, its ability to optimize multiple fitting
criteria, and its relatively low complexity.
The paper presents the application of the model in a set of European countries for the period
19982008. The main limitation of the discussed empirical results concerns the assessment
of the detailed IPC indicators. Data availability heavily affects the selection of these sets of
indicators, which in turn may have a significant impact on the estimations. Moreover, the
proposed MONLP model adopts a linear regression approach, although the composite indices
may be estimated using alternative functional forms. Thus, the assumption of linearity may
be considered as a limitation of the model, although considering alternative nonlinear forms
require a deeper knowledge on the interrelations among the IPC variables.
Given the above, future research efforts may study the relations between the aggregated
indices and the set of detailed performance indicators, and consider alternative multiobjective
techniques for solving the MONLP model. In addition, hysteresis effects may also be studied,
given their importance in the macroeconomic level (Reinert 1995), while other future research
directions may consider the adoption of the proposed approach in an industry and firm level,
and the development of a hierarchical measurement model.
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Finally, it is important to note that the main aim of developing national benchmarks or
scoreboards based on composite indices is not only to obtain country rankings and similar
results, but also to help policy-makers in identifying strengths and weaknesses, tracking
changes over time, and, in some cases, develop early warning systems.
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