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Innovation as a latent variable: an alternative measurement approach

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  • Maria Luísa Silva Ferreira Lopes

    (Universidade Nova de Lisboa and CEFAGE-UÉ)

Abstract

In searching for improvements in the measurement of innovation, in this paper we suggest the idea of conceiving innovation as a latent variable or concept, i.e., one that cannot be accurately defined or directly measured. We propose the use of multivariate statistical analysis (a combination of cluster and discriminant analysis) as a possible way to develop indirect measures of innovation that are more appropriate to the intrinsically imprecise nature of the concept to be measured. In this way, the problem of using an ambiguous and subjective ‘innovation definition’ is limited, reducing measurement errors. We obtain an ‘innovation intensity index,’ which is a weighted average of ten different predictors.

Suggested Citation

  • Maria Luísa Silva Ferreira Lopes, 2010. "Innovation as a latent variable: an alternative measurement approach," CEFAGE-UE Working Papers 2010_08, University of Evora, CEFAGE-UE (Portugal).
    • Handle: RePEc:cfe:wpcefa:2010_08
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    References listed on IDEAS

    as
    1. Ian Miles, 1995. "Innovation in Services," Chapters, in: Mark Dodgson & Roy Rothwell (ed.), The Handbook of Industrial Innovation, chapter 18, Edward Elgar Publishing.
    2. Christiane Hipp & Bruce S. Tether & Ian Miles, 2000. "The Incidence And Effects Of Innovation In Services: Evidence From Germany," International Journal of Innovation Management (ijim), World Scientific Publishing Co. Pte. Ltd., vol. 4(04), pages 417-453.
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    More about this item

    Keywords

    Measurement; Innovation; Multivariate; Discriminant analysis; Cluster analysis; Latent variable; innovation index;
    All these keywords.

    JEL classification:

    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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