Academic journal article Innovation: Organization & Management

An International Comparison of R&D Efficiency of Multiple Innovative Outputs: The Role of the National Innovation System

Academic journal article Innovation: Organization & Management

An International Comparison of R&D Efficiency of Multiple Innovative Outputs: The Role of the National Innovation System

Article excerpt

(ProQuest: ... denotes formulae omitted.)


Innovation is widely recognized as the primary driving force of sustainable economic growth1. Most nations have therefore gradually devoted more efforts to research and development (R&D) and have tried to create a favorable innovation environment by enforcing intellectual property rights (IPR) to promote innovations. Whether R&D can serve as a major source of competitive advantage depends on efficient and productive innovation processes (Werner & Souder 1997). Using R&D resources inefficiently may result in slow technological progress and reduce the complementary effect brought on by other innovative activities. Thus, understanding the nature of R&D efficiency and its determinants is essential for designing R&D policies that effectively foster innovation and promote technological progress.

Innovation includes both technological and non-technological innovation, suggesting that measures of national innovative outputs are multidimensional, such as patents, royalties and licensing fees (hereafter, RLF), journal articles, and so on. While patents are widely recognized as a proxy for innovative output (Griliches 1990), various decision-making units (DMUs) such as firms, industries, and nations may produce distinct output more efficiently by locating in particular technological environments. For instance, some R&D programs are essentially basic-research-oriented and have the primary objective of publishing academic journal papers. These programs are particularly relevant to non-technological innovations. Applied-technology-oriented R&D programs can alternatively aim at licensing or selling technologies. Hence, it is difficult to compare the R&D efficiency of various national R&D programs in the same context, meaning that comparing R&D efficiency across nations by focusing on one output could lead to a narrow view of national R&D efficiency.

While this point is well known among economists, few studies comparing the relative efficiency of R&D activity across nations measure such relative efficiency by considering multiple outputs. Lee and Park (2005) and Wang and Huang (2007) both evaluated R&D efficiency across nations by considering three outputs (patents, technology balance of receipts, and journal articles) and two outputs (patents and SCI and EI articles), respectively. Lee et al. (2009) used the Data envelopment analysis (DEA) approach to measure and compare the performance of national R&D programs in South Korea. To consider the heterogeneity of national R&D programs' objectives, they included 10 outputs, mainly academic publications, patents, and higher education graduates. Although these studies contain interesting results, some potential room for improvement remains.

To incorporate various outputs and produce a single measure for R&D efficiency, the relative importance of outputs must be determined and fixed. However, no matter what sets of weights are applied to the evaluation of various innovative outputs, they cannot determine the individual output-specific R&D efficiency. Moreover, neither of the above mentioned studies considered a scenario in which the same input factors could simultaneously produce multiple outputs in a national innovation production, nor did they control for the influences of external environments on R&D efficiency, particularly the role of the national innovation system (NIS).

Innovation environment is an important factor that affects the efficiency and productivity of the innovation process for all kinds of DMUs. A better innovation environment enables DMUs to conduct R&D more efficiently and consequently stimulates more innovations, whereas an inferior one may induce the inefficient use of R&D resources and result in slower technological progress. The NIS proposed by Lundvall (1992), Nelson (1993), and Edquist (1997) focuses on the interplay among the government, higher education institutions, and industries that contribute to innovative behavior in a specific nation, which may significantly affect R&D efficiency of various innovative outputs. …

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