Effect of public and private sector R&D indicators on innovation performance and competitiveness: Case of the western European NUTS 2 regions

Abstract

Innovation performance is considered a crucial indicator of the competitiveness of countries and regions. Studies on innovation performance also need to assess it, distinguishing between public and private sector R&D indicators at the regional level. The objectives of this article are to explore the groups of innovation performance and their spatial distribution in NUTS 2 Western European regions and to evaluate the effect of selected public and private sector R&D indicators on innovation performance in 2014-2021. The fixed effects model on the panel data was used to analyse the impact of selected public and private sector R&D indicators on innovation performance. Research shows that innovation performance increases with time; however, performance suffers from regional disparities, which are affected by selected structural determinants from the public and private sector perspectives. The results of the panel data analysis suggest that the population aged 25-34 who have completed their tertiary education, the most cited scientific publications, and public-private co-publications are statistically significant R&D public sector indicators for the innovation performance of Western European NUTS 2 regions. Furthermore, the results indicate that SMEs that introduce product innovations, employment in knowledge-intensive activities, patent applications, and innovative SMEs that collaborate with others are statistically significant private sector R&D indicators. However, the results reveal various effects of these indicators on individual groups of innovation performance in both the public and private sectors. These findings can benefit policymakers in developing research and innovation systems when finding tools to increase innovation performance and, thereby, the competitiveness of left-behind NUTS 2 regions.