An integrated system for evaluating the impact of firm-based innovations on GDP
DOI: https://doi.org/10.3846/jbem.2025.24839Abstract
The study analyses the impact of innovation on the economy in the EU and related countries (Norway and Switzerland), highlighting the large differences between these countries. An integrated measurement framework is proposed to assess the long-term impact of firm-based innovations on GDP comprehensively. The literature analysis sheds light on the link between firm-based innovations and economic growth, and the study follows a three-step methodology: firstly, data on innovation and GDP are collected from Eurostat and OECD, followed by an econometric analysis to identify the links between firm-based innovation performance and economic growth, and finally, a cluster analysis is performed. This cluster analysis grouped countries according to their level of innovation and economic performance. The empirical results showed that Germany, Denmark, Finland, the Netherlands, Sweden, and Ireland have high innovation and GDP growth rates, and their innovation ecosystem contribute significantly to economic prosperity. The study confirms that innovation drives GDP growth, but its impact varies across countries depending on R&D investment, workforce skills, and policy environment. Therefore, policymakers should develop innovation strategies that consider each country’s specificities following the results of cluster analysis to maximise the economic impact.
Keywords:
firm-based innovation, integrated framework, cluster analysis, GDP, economic growth, indicatorsHow to Cite
Share
License
Copyright (c) 2025 The Author(s). Published by Vilnius Gediminas Technical University.
This work is licensed under a Creative Commons Attribution 4.0 International License.
References
Aghion, P., & Howitt, P. (1992). A model of growth through creative destruction. Econometrica, 60(2), 323–351. https://doi.org/10.2307/2951599
Ambos, B., Brandl, K., Perri, A., Scalera, V. G., & Van Assche, A. (2021). The nature of innovation in global value chains. Journal of World Business, 56(4), Article 101221. https://doi.org/10.1016/j.jwb.2021.101221
Antonucci, T., & Pianta, M. (2002). Employment effects of product and process innovation in Europe. International Review of Applied Economics, 16(3), 295–307. https://doi.org/10.1080/02692170210136127
Boeing, P., Eberle, J., & Howell, A. (2022). The impact of China’s R&D subsidies on R&D investment, technological upgrading and economic growth. Technological Forecasting and Social Change, 174, Article 121212. https://doi.org/10.1016/j.techfore.2021.121212
Bottazzi, L., & Peri, G. (2003). Innovation and spillovers in regions: Evidence from European patent data. European Economic Review, 47(4), 687–710. https://doi.org/10.1016/S0014-2921(02)00307-0
Bresciani, S., Puertas, R., Ferraris, A., & Santoro, G. (2021). Innovation, environmental sustainability and economic development: DEA-Bootstrap and multilevel analysis to compare two regions. Technological Forecasting and Social Change, 172, Article 121040. https://doi.org/10.1016/j.techfore.2021.121040
Damanpour, F. (1992). Organizational size and innovation. Organization Studies, 13(3), 375–402. https://doi.org/10.1177/017084069201300304
Dempere, J., Qamar, M., Allam, H., & Malik, S. (2023). The impact of innovation on economic growth, foreign direct investment, and self-employment: A global perspective. Economies, 11(7), Article 182. https://doi.org/10.3390/economies11070182
Destefanis, S., & Rehman, N. U. (2023). Investment, innovation activities and employment across European regions. Structural Change and Economic Dynamics, 65, 474–490. https://doi.org/10.1016/j.strueco.2023.03.013
Dokas, I., Panagiotidis, M., Papadamou, S., & Spyromitros, E. (2023). Does innovation affect the impact of corruption on economic growth? International evidence. Economic Analysis and Policy, 77, 1030–1054. https://doi.org/10.1016/j.eap.2022.12.032
Ersin, Ö., Ustabaş, A., & Acar, T. (2022). The nonlinear effects of high technology exports, R&D and patents on economic growth: A panel threshold approach to 35 OECD countries. Romanian Journal of Economic Forecasting, 25(1), 26–44.
Esko, S., Zeromskis, M., & Hsuan, J. (2013). Value chain and innovation at the base of the pyramid. South Asian Journal of Global Business Research, 2(2), 230–250. https://doi.org/10.1108/SAJGBR-03-2012-0020
European Commission. (2021). European Innovation Scoreboard 2021. Publications Office of the European Union. https://op.europa.eu/en/publication-detail/-/publication/bd128c04-0b93-11ec-adb1-01aa75ed71a1/
Eurostat. (2024). Community innovation survey 2022 – key indicators. https://ec.europa.eu/eurostat/statistics-explained/index.php?title=Community_Innovation_Survey_2022_-_key_indicators
Fagerberg, J., & Verspagen, B. (2002). Technology-gaps, innovation-diffusion and transformation: An evolutionary interpretation. Research Policy, 31(8–9), 1291–1304. https://doi.org/10.1016/S0048-7333(02)00064-1
Fernández-Cerezo, A., & Montero, J. M. (2021). A sectoral analysis of the future challenges facing the Spanish economy (Documentos Ocasionales No. 2133). Banco de España. https://www.bde.es/f/webbde/SES/Secciones/Publicaciones/InformesBoletinesRevistas/ArticulosAnaliticos/21/T4/Files/do2133e.pdf
Geronikolaou, G., & Papachristou, G. A. (2008). Venture capital and innovation in Europe. SSRN. https://doi.org/10.2139/ssrn.1309186
Grafström, J., Söderholm, P., Gawel, E., Lehmann, P., & Strunz, S. (2023). Government support to renewable energy R&D: Drivers and strategic interactions among EU Member States. Economics of Innovation and New Technology, 32(1), 1–24. https://doi.org/10.1080/10438599.2020.1857499
Griliches, Z. (1990). Patent statistics as economic indicators: A survey. In Z. Griliches (Ed.). R&D and productivity: The econometric evidence (pp. 287–343). https://www.nber.org/system/files/chapters/c8351/c8351.pdf
Guzman, J., Murray, F., Stern, S., & Williams, H. (2024). Accelerating innovation ecosystems: The promise and challenges of regional innovation engines. Entrepreneurship and Innovation Policy and the Economy, 3(1), 9–75. https://doi.org/10.1086/727744
Hajighasemi, A., Oghazi, P., Aliyari, S., & Pashkevich, N. (2022). The impact of welfare state systems on innovation performance and competitiveness: European country clusters. Journal of Innovation & Knowledge, 7(4), Article 100236. https://doi.org/10.1016/j.jik.2022.100236
Hall, B. H., Mairesse, J., & Mohnen, P. (2010). Measuring the returns to R&D. In B. H. Hall & N. Rosenberg (Eds.), Handbook of the economics of innovation (Vol. 2, pp. 1031–1082). Elsevier. https://doi.org/10.1016/S0169-7218(10)02008-3
Hardi, I., Ray, S., Attari, M. U. Q., Ali, N., & Idroes, G. M. (2024). Innovation and economic growth in the top five southeast Asian economies: A decomposition analysis. Ekonomikalia Journal of Economics, 2(1), 1–14. https://doi.org/10.60084/eje.v2i1.145
Harrison, R., Jaumandreu, J., Mairesse, J., & Peters, B. (2014). Does innovation stimulate employment? A firm-level analysis using comparable micro-data from four European countries. International Journal of Industrial Organization, 35, 29–43. https://doi.org/10.1016/j.ijindorg.2014.06.001
Häggmark, T., & Elofsson, K. (2022). The drivers of private and public eco-innovations in six large countries. Journal of Cleaner Production, 364, Article 132628. https://doi.org/10.1016/j.jclepro.2022.132628
Kučera, J., & Fiľa, M. (2022). R&D expenditure, innovation performance and economic development of the EU countries. Entrepreneurship and Sustainability Issues, 9(3), 227–241. https://doi.org/10.9770/jesi.2022.9.3(14)
Liu, L., Anwar, A., Irmak, E., & Pelit, I. (2022). Asymmetric linkages between public-private partnership, environmental innovation, and transport emissions. Economic Research – Ekonomska Istraživanja, 35(1), 6519–6540. https://doi.org/10.1080/1331677X.2022.2049979
Liu, Y., Chen, Y., Lu, H., Zhong, W., Yuan, G. C., & Ma, P. (2024). Orthogonal multimodality integration and clustering in single-cell data. BMC Bioinformatics, 25, Article 164. https://doi.org/10.1186/s12859-024-05773-y
Maradana, R. P., Pradhan, R. P., Dash, S., Gaurav, K., Jayakumar, M., & Chatterjee, D. (2017). Does innovation promote economic growth? Evidence from European countries. Journal of Innovation and Entrepreneurship, 6, Article 1. https://doi.org/10.1186/s13731-016-0061-9
Mewes, L., & Broekel, T. (2022). Technological complexity and economic growth of regions. Research Policy, 51(8), Article 104156. https://doi.org/10.1016/j.respol.2020.104156
Organisation for Economic Co-operation and Development. (n.d.). Science, technology and innovation scoreboard [Dataset]. https://www.oecd.org/en/data/datasets/science-technology-and-innovation-scoreboard.html
Organisation for Economic Co-operation and Development. (2018). The measurement of scientific, technological and innovation activities. https://www.oecd.org/en/publications/the-measurement-of-scientific-technological-and-innovation-activities_24132764.html
Paula, F. D. O., & Ferreira da Silva, J. (2021). R&D spending and patents: Levers of national development. Innovation & Management Review, 18(2), 175–191. https://doi.org/10.1108/INMR-11-2019-0142
Pijnenburg, K., & Kholodilin, K. A. (2014). Do regions with entrepreneurial neighbours perform better? A spatial econometric approach for German regions. Regional Studies, 48(5), 866–882. https://doi.org/10.1080/00343404.2012.697143
Prajogo, D. I., McDermott, P., & Goh, M. (2008). Impact of value chain activities on quality and innovation. International Journal of Operations & Production Management, 28(7), 615–635. https://doi.org/10.1108/01443570810881785
Raghutla, C., & Kolati, Y. (2023). Public-private partnerships investment in energy as new determinant of renewable energy: The role of political cooperation in China and India. Energy Reports, 10, 3092–3101. https://doi.org/10.1016/j.egyr.2023.09.139
Romer, P. M. (1990). Endogenous technological change. Journal of Political Economy, 98(5), S71–S102. https://doi.org/10.1086/261725
Roper, S., Du, J., & Love, J. H. (2008). Modelling the innovation value chain. Research Policy, 37(6–7), 961–977. https://doi.org/10.1016/j.respol.2008.04.005
Sawng, Y. W., Kim, P. R., & Park, J. (2021). ICT investment and GDP growth: Causality analysis for the case of Korea. Telecommunications Policy, 45(7), Article 102157. https://doi.org/10.1016/j.telpol.2021.102157
Simmie, J., Sennett, J., Wood, P., & Hart, D. (2002). Innovation in Europe: A tale of networks, knowledge and trade in five cities. Regional Studies, 36(1), 47–64. https://doi.org/10.1080/00343400120099852
Symeonidis, G. (1996). Innovation, firm size and market structure: Schumpeterian hypotheses and some new themes (OECD Economics Department Working Papers No. 161). OECD. https://www.oecd.org/content/dam/oecd/en/publications/reports/1996/01/innovation-firm-size-and-market-structure_g17a13c7/603802238336.pdf
Sojoodi, S., & Baghbanpour, J. (2024). The relationship between high-tech industries exports and GDP growth in the selected developing and developed countries. Journal of the Knowledge Economy, 15(1), 2073–2095. https://doi.org/10.1007/s13132-023-01174-3
Schumpeter, J. A. (1934). The theory of economic development. Harvard University Press.
Wei, Y. (2022). Regional governments and opportunity entrepreneurship in underdeveloped institutional environments: An entrepreneurial ecosystem perspective. Research Policy, 51(1), Article 104380. https://doi.org/10.1016/j.respol.2021.104380
Zhao, P., Lu, Z., Kou, J., & Du, J. (2023). Regional differences and convergence of green innovation efficiency in China. Journal of Environmental Management, 325, Article 116618. https://doi.org/10.1016/j.jenvman.2022.116618
View article in other formats
CrossMark check
Published
Issue
Section
Copyright
Copyright (c) 2025 The Author(s). Published by Vilnius Gediminas Technical University.
License
This work is licensed under a Creative Commons Attribution 4.0 International License.