Measuring firm innovativeness: towards a composite innovation index built on firm innovative posture, propensity and performance attributes

Abstract

The ability to innovate is generally accepted as a critical success factor to growth and future performance of firms. Yet, this acceptance obscures a comprehensive perspective on how firms can influence their innovation capacity and resulting performance. This paper proposes a '3P'construct of innovation measurement that simultaneously considers the Posture, Propensity and Performance related to a firm's innovation capabilities. We propose and provide empirical support showing that robust measurement of the performance implications of innovation requires the consideration of input, throughput and output factors simultaneously. Single or more limited indicators do not offer the degree of fine-tuning to a firm's innovation system that managers require. Thus, we propose the development, and future research into contingent variations, of a Composite Innovation Index (CII). We further demonstrate its use in comparing innovators and allowing managers to design a firm's innovation system.

The impact of digitalization on business models

“…The more competitive the external environment is, the more discussions on what to do on a strategic as well as a BM level will be initiated (Carayannis and Provance, 2008;Casadesus-Masanell and Ricart, 2010;Pauwels and Weiss, 2008).…”

A multilevel and multistage efficiency evaluation of innovation systems: A multiobjective DEA approach

“…For instance, Carayannis and Provance (2008) propose a composite indicator approach for the study of innovation at the micro level pivoting around the 3Ps (Posture, Propensity, and Performance). Also, Cai (2011) refers to three major quantitative approaches in studying national (or regional) innovation systems at the macro level: composite indicators, econometric analysis, and data envelopment analysis.…”

“Happy accidents”: innovation-driven opportunities and perspectives for development in the knowledge economy

“…In the short term, firm exhibit innovativeness; in the medium term, they exhibit different levels of innovative performance and in the long-term, different levels of innovative competence (Carayannis and Provance 2007). Both development and innovation are multidimensional concepts that cannot be easily captured in a single measure.…”