The Role of Human and Social Capital for Innovation in Catching-Up Economies

Kaasa, Anneli; Parts, Eve; Kaldaru, Helje

doi:10.1007/978-1-4614-1548-0_14

Anneli Kaasa PhD⁴,
Eve Parts PhD⁴ &
Helje Kaldaru PhD⁴

Part of the book series: Innovation, Technology, and Knowledge Management ((ITKM,volume 15))

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Abstract

This exploratory study investigates how innovative activities are related to human and social capital in the context of catching-up countries facing both latecomer advantages and path dependency. Data on 30 European countries are analyzed, including ten transition countries with communist backgrounds that are considered catching-up countries in this study. The results showed that catching-up economies, which tend to have poorer performance in innovative activities, also tend to have lower levels of human capital and social capital. Increasing institutional trust and encouraging lifelong learning can be considered most important. It also appeared that while smaller catching-up countries benefit from the higher levels of social capital usually observed in smaller countries, the opportunities associated with being large did not seem to be sufficiently exploited in the larger catching-up countries.

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Notes

1.
From various aspects of social capital pointed out in the literature only those are included in the analysis, which are supposed to be related to innovative activities.
2.
There are 12 countries falling into the group of small countries, including five catching-up countries (Estonia, Latvia, Lithuania, Slovakia, and Slovenia) and seven old economies (Denmark, Finland, Iceland, Ireland, Luxembourg, Malta, and Norway); 18 countries are considered large countries, including five catching-up countries (Bulgaria, Czech Republic, Hungary, Poland, and Romania) and, the largest group, 13 old economies (Austria, Belgium, France, Germany, Greece, Italy, Netherlands, Portugal, Spain, Sweden, Switzerland, Turkey, and UK).

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Acknowledgments

The authors acknowledge the financial support from the Estonian Ministry of Education target funding SF0180037s08.

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Authors and Affiliations

University of Tartu, Tartu, Estonia
Anneli Kaasa PhD, Eve Parts PhD & Helje Kaldaru PhD

Authors

Anneli Kaasa PhD
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Eve Parts PhD
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Helje Kaldaru PhD
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Correspondence to Anneli Kaasa PhD .

Editor information

Editors and Affiliations

School of Business, George Washington University, Washington, 20052, District of Columbia, USA
Elias G. Carayannis
Tartu, 51009, Estonia
Urmas Varblane
Tartu, 51009, Estonia
Tõnu Roolaht

Appendices

Appendix A Initial Indicators Used in the Analysis

	Indicator	The exact name of indicator according to the source	Source	Year(s)
Innovation activity	EPO patents per million population	Number of patents granted by the US Patent and Trademark Office (USPTO) by year of grant per million population	EIS	Average of 2002, 2003^a
	Innovative enterprises (% of enterprises)	Enterprises with innovation activities (% of total enterprises)	Eurostat (CIS)	2004
	Product innovation (% of enterprises)	Enterprises with product innovation (% of total enterprises)	Eurostat (CIS)	2004
	Process innovation (% of enterprises)	Enterprises with process innovation (% of total enterprises)	Eurostat (CIS)	2004
	Non-technological change (% of SMEs)	Small- and medium-sized enterprises (SMEs) using non-technological change (% of SMEs)	EIS (CIS)	Average of 2000, 2004^b
R&D	R&D expenditures	BERD (Business enterprise expenditure on R&D) (% of GDP)	EIS	1999^c
Human capital	Population with tertiary education	Population with tertiary education (ISCED levels 5 and 6) per 100 population aged 25–64	Eurostat	1999^d
Human capital	Participation in life-long learning	Number of persons involved in life-long learning per 100 population aged 25–64	EIS	2002
Formal networks	Belonging to voluntary organizations	Belong to various voluntary organizations^e, number of organizations mentioned	WVS	1999^f
Formal networks	Unpaid voluntary work for organizations	Unpaid voluntary work for organizations^e, number of organizations mentioned	WVS	1999^f
Informal networks	Spending time with friends	How often spend time with friends, weekly, %	WVS	1999^f
	Spending time socially with colleagues	How often spend time socially with colleagues from work or your profession, weekly, %	WVS	1999^f
	Friends important in life	Importance of friends in life, average on scale 1–4	WVS	1999^f
General trust	General trust	Most people can be trusted rather than you need to be very careful in dealing with people, people trusted, %	WVS	1999^f
Institutional trust	Satisfaction with the democracy	Satisfied with the way democracy is developing in our country, average on scale 1–4	WVS	1999^f
	Confidence in the civil service	Confidence in the civil service, average on scale 1–4	WVS	1999^f
	Confidence in parliament	Confidence in parliament, average on scale 1–4	WVS	1999^f
	Confidence in the police	Confidence in the police, average on scale 1–4	WVS	1999^f

^aTurkey 2003

^bFinland, Latvia, Sweden, Slovenia, Switzerland, Iceland 2000; Ireland, Poland 2004

^cAustria 1998; Luxembourg 2000; Switzerland 2001; Malta 2002

^dBulgaria, Malta 2000, Lithuania 2001

^eReligious or church organizations; education, arts, music or cultural activities; youth work; professional associations; political parties or groups; labor unions; social welfare service; local community action; third world development or human rights; conservation, environment, animal rights groups; sports or recreation; women’s groups; peace movement; voluntary organizations concerned with health; other voluntary organizations

^fNorway, Switzerland 1996; Finland, Spain 2000; Turkey 2001

Appendix B Results of Factor Analysis

Latent variable/factor	Indicator	Factor loadings	Variance explained (%)	KMO measure
Initial factor analysis
Formal networks	Belonging to voluntary organizations	0.93	87.02	0.50
Formal networks	Unpaid voluntary work for organizations	0.93	87.02	0.50
Informal networks	Spending time with friends	0.95	67.25	0.49
	Friends important in life	0.87
	Spending time socially with colleagues	0.60
Institutional trust	Confidence in parliament	0.91	71.98	0.75
	Confidence in the police	0.88
	Confidence in the civil service	0.84
	Satisfaction with the democracy	0.75
Secondary factor analysis
Human capital	Tertiary education	0.88	76.95	0.50
Human capital	Life-long learning	0.88	76.95	0.50
Social capital	General trust	0.87	62.38	0.71
	Formal networks	0.83
	Institutional trust	0.76
	Informal networks	0.69

Appendix C Indicators of Innovative Activity, R&D, Human and Social Capital for European Countries (Standardized Values) and Their Population (Millions)

	Patent applications	Innovative activities	Product innovations	Process innovations	Non-technological innovations	R&D expenditures	Tertiary education	Life-long learning	Human capital	Formal networks	Informal networks	Institutional trust	General trust	Social capital	Population size
Austria	0.71	1.13	1.27	1.46	0.92	0.36	−0.63	−0.23	−0.53	0.22	−0.16	0.84	0.13	0.39	8.28
Belgium	0.30	1.04	0.97	1.00	0.25	0.02	0.95	−0.36	0.32	0.65	−0.35	−0.31	−0.07	0.06	10.58
Bulgaria	−0.87	−1.61	−1.18	−1.97	−2.10	−0.40	−0.07	−1.00	−0.64	−0.93	0.41	−1.25	−0.30	−0.63	7.68
Czech Republic	−0.79	0.06	0.15	0.34	−0.16	−0.47	−1.00	−0.43	−0.86	−0.04	−0.89	−1.46	−0.48	−0.83	10.29
Denmark	1.02	1.09	0.74	0.65	0.11	0.82	1.07	1.11	1.23	0.63	0.32	1.32	2.12	1.54	5.45
Estonia	−0.81	0.84	1.18	0.65	0.41	−0.09	1.48	−0.52	0.54	−0.77	−1.27	−0.77	−0.54	−0.99	1.34
Finland	1.70	0.44	0.38	0.09	0.49	1.77	1.71	1.17	1.63	0.78	0.62	0.84	1.60	1.33	5.28
France	0.35	−0.37	−0.66	−0.16	−0.73	0.89	0.30	−0.83	−0.32	−0.59	0.11	−0.07	−0.58	−0.34	63.62
Germany	1.68	2.08	1.84	1.01	1.33	0.67	0.58	−0.44	0.06	−0.54	−0.33	0.38	0.18	−0.03	82.31
Greece	−0.82	−0.12	−0.07	0.55	0.65	−0.28	−0.27	−1.01	−0.76	1.09	1.03	−1.65	−0.49	0.02	11.17
Hungary	−0.75	−1.26	−1.21	−1.49	−1.09	−0.55	−0.58	−0.76	−0.80	−0.83	−1.29	−0.49	−0.61	−0.95	10.07
Iceland	0.53	1.09			0.98	2.76	0.45	1.80	1.26	1.23	0.28	1.62	0.57	1.25	0.31
Ireland	−0.24	1.11	1.28	1.71	0.68	−0.89	−0.02	−0.22	−0.17	0.21	1.43	1.05	0.21	0.92	4.31
Italy	−0.18	−0.09	−0.77	0.26	0.05	−0.09	−1.24	−0.59	−1.09	−0.18	−0.01	−0.26	0.05	−0.07	59.13
Latvia	−0.86	−1.51			−0.30	−0.93	−0.12	−0.15	−0.18	−0.86	−1.58	−0.75	−0.90	−1.22	2.28
Lithuania	−0.88	−0.68	−0.88	−0.69	−0.89	−0.25	0.48	−0.75	−0.18	−1.17	−1.68	−1.88	−0.42	−1.53	3.38
Luxembourg	0.60	1.11	1.34	0.98	1.83	−1.61	−0.07	−0.21	−0.19	0.62	0.26	1.42	−0.36	0.64	0.48
Malta	−0.82	−1.27	−0.97	−1.62	−1.18	−1.31	−1.80	−0.62	−1.43	−0.19	−1.33	0.81	−0.68	−0.37	0.41
Netherlands	1.17	−0.24	−0.13	−0.43	−0.54	1.24	0.53	0.86	0.77	2.17	0.88	0.66	1.71	1.85	16.36
Norway	0.16	−0.04	−0.03	−0.86	−0.65	0.67	1.48	0.48	1.10				2.05		4.68
Poland	−0.87	−0.96	−1.12	−0.80	−1.44	−0.55	−1.00	−0.63	−0.97	−0.97	−1.26	−0.39	−0.79	−1.02	38.13
Portugal	−0.86	0.26	−0.29	0.75	0.41	0.02	−1.35	−0.80	−1.27	−1.09	0.62	0.76	−1.33	−0.39	10.60
Romania	−0.90	−1.36	−1.14	−0.98	0.45	−1.73	−1.35	−1.02	−1.40	−1.01	−1.14	−1.59	−1.32	−1.56	21.57
Slovakia	−0.84	−1.10	−1.15	−1.01	−1.96	−1.16	−1.17	−0.05	−0.74	0.65	−0.74	−0.76	−0.98	−0.53	5.39
Slovenia	−0.48	−0.80			0.76	0.32	−0.42	−0.04	−0.29	−0.02	0.23	−0.81	−0.61	−0.36	2.01
Spain	−0.65	−0.21	−0.73	0.03	−0.22	−0.51	0.34	−0.55	−0.15	−0.79	0.70	0.36	0.27	0.20	44.47
Sweden	1.54	0.94	1.19	0.55	0.29	1.35	1.33	1.11	1.38	2.56	1.10	0.80	2.11	2.23	9.11
Switzerland	2.66				1.61	0.44	0.67	3.08	2.12				0.56		7.51
Turkey	−0.90					−0.63	−1.43			−1.33	1.97	−0.04	−0.98	−0.21	69.69
UK	0.13	0.42				0.13	1.17	1.59	1.56	0.50	1.14	0.26	−0.12	0.57	60.78

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Kaasa, A., Parts, E., Kaldaru, H. (2012). The Role of Human and Social Capital for Innovation in Catching-Up Economies. In: Carayannis, E., Varblane, U., Roolaht, T. (eds) Innovation Systems in Small Catching-Up Economies. Innovation, Technology, and Knowledge Management, vol 15. Springer, New York, NY. https://doi.org/10.1007/978-1-4614-1548-0_14

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DOI: https://doi.org/10.1007/978-1-4614-1548-0_14
Published: 19 November 2011
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