Despite the dearth of research on innovation, the key determinants of innovation performance
still need to be clarified. Besides, a comparative analysis of the determinants of
innovation performance across countries at different income levels has yet to be found.
This study, therefore, aims to bridge this research gap by considering the innovation
performance of 63 countries. Participating countries were purposefully selected from
the Global Innovation Index (GII) dataset. Multistage and multimodal analyses were
conducted, including multiple linear regressions, hierarchical regression, and ANOVA,
to examine the variation in innovation performance and pinpoint critical determinants
in each category of countries. The result reveals that human capital, research, infrastructure,
and business sophistication are the key pillars determining countries’ innovation
performance. In a variable-level analysis, innovation linkage and knowledge absorption
(both of business sophistication), research and development (R&D), and infrastructure
(inculcating both physical and digital) are the best predicting variables. The shortage
of human capital to promote R&D is the biggest bottleneck hampering innovation in
the lower-middle-income category. Also, both human capital for R&D activities and
innovation linkage equally affect the upper-middle-income, and the latter one, innovation
linkage, remains the main challenge even for the high-income category. The study implies
that innovation performance predicts a country’s economic growth. The level of innovation
performance and the determinants of innovation vary per the countries’ income levels.
Accordingly, countries and firms in various income categories should prioritize tackling
their respective bottlenecks hindering innovation performance in their policy directions.
The study claims to have extended the horizon of understanding determinants of innovation
across countries and revealed the most crucial factors in each category of countries.
Further empirical comparative research can be done by incorporating an informal institution,
national culture, as an additional determinant and specifying sectors across income
categories.
