Mechanisms and functions within a national innovation system

Abstract

In modern society, the competitive success of countries is increasingly dependent on the effective management of their national innovation system (NIS). Therefore, understanding the mechanisms behind NISs has become essential. After reviewing the current understanding of the NIS concept and the existing measurement models, this study proposes to consider the NIS as an intangible (underlying) asset of a specific kind and identifies its seven fundamental components, which are extracted with a new measurement model, the Global Innovation Index (GII). This study employs the Structural Equation Modeling (SEM) techniques to analyze the relationships among the components of an NIS. Our results support the existence of a causal link between the constituents of an NIS and provide several perspectives regarding NIS management opportunities. In particular, we find that the efficient management of institutional capital is a key determinant of innovation success for non-high-income countries.