Measuring regional innovation: A critical inspection of the ability of single indicators to shape technological change

The disparities in regional innovation are often illustrated in both scientific research and politics by a single innovation indicator or a composite index. Do such undeniably catchy approaches really convey a better understanding of regional innovation? A composite index can only be employed for an effective innovation policy if the various innovation indicators are highly correlated and affected similarly by the same drivers. The paper investigates driving forces for three composite innovation indices and six innovation indicators covering various aspects of innovation. The analyses demonstrate that the effects of the drivers differ substantially with regard to the investigated aspects of innovation. Knowledge about relevant drivers of innovation is indispensable for the design of an efficient innovation policy. Therefore using only a composite index in order to predict or to influence the innovation dynamic of a territory is highly problematic because of the loss of important parts of the underlying transmission mechanism from innovation policies to innovation outcome. Concentrating on one innovation indicator signifies investigating a specific aspect of regional innovation. Provided these limitations are intended the application of a single indicator may be more appropriate.