On the meaning of innovation performance: Is the synthetic indicator of the Innovation Union Scoreboard flawed?

The European Union (EU) annually publishes an Innovation Union Scoreboard (IUS) as a tool to measure the innovation performance of EU Member States by means of a composite index, called the Summary Innovation Index (SII). The SII is constituted by an average of 25 indicators. The SII is claimed to rank Member States according to their innovation performance. This means that the higher the average value of the 25 indicators, the better the innovation performance is said to be. The first purpose of this article is to assess whether the SII constitutes a meaningful measure of innovation performance. Our conclusion is that it does not. Our second purpose is to develop alternative, productivity or efficiency-based, measures of innovation system performance based on a simple index number, and complement it with advanced and robust nonparametric Data Envelopment Analysis techniques. By doing so, the article offers a critical review of the SII, and proposes to put more emphasis on the identification of and relation between input and output innovation indicators. The data provided by the 2014 and 2015 editions of the IUS are here used to analyze the innovation performance of all 28 EU national innovation systems. A theoretical background and reasons for selecting the indicators used are presented, and our new ranking of the innovation performance using bias-corrected efficiency scores of all EU countries is calculated. We find that the results differ substantially between the SII and the ranking based on our method, with significant consequences for the design of innovation policies.

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