A typology of European countries based on innovation efficiency and technology gaps: The role of early-stage entrepreneurship

This paper analyzes national innovation efficiency in Europe considering the role of early-stage entrepreneurship. In doing so, potential technological differences, i.e. technology gaps, are computed in a metafrontier framework taking into account that developed countries may use a different technology in producing innovation from their developing/transition counterparts. Using bootstrap DEA, we find that developing/transition countries exhibit, in average terms, twice the technology gap of that corresponding to developed economies. Based on innovation efficiency and technology gap measures, a typology of the European countries is introduced revealing features related to national strategic positioning, countries' absorptive capacity and knowledge spillover effects. The group of European innovation leaders is formed by Germany, Switzerland, Netherlands, Denmark, Austria, Iceland and Italy. Second-stage results imply that entrepreneurial activity motivated by necessity hinders the adoption of superior technology in producing innovation in Europe.