The influence of bottlenecks on innovation systems performance: Put the slowest climber first

Abstract

This paper contributes to the literature with a methodology that helps identify the functions that constrain the overall performance of an innovation system, hence providing clear guidelines to policymakers on the direction of their interventions. This methodology relies on the notion of penalty for bottleneck, which is defined as the weakest link or the binding constraint that holds back system performance. These penalty bottlenecks are applied to all the indicators that characterize innovation systems, and consider its input-output mix when assessing their performance through a Productivity Innovation Index. The data provided by the 2021 edition of the European Innovation Scoreboard are used to illustrate the utility of the method introduced in the paper. We first identify the input and output bottlenecks for every country. Second, we report the productivity loss due to the existence of these bottlenecks. Third, we evidence the responsiveness of the Productivity Innovation Index to bottleneck alleviation, from three different perspectives: (i) application of a 10 % alleviation to the input bottleneck; (ii) application of a 10 % alleviation to the output bottleneck; and (iii) application of a 5 % alleviation to both the input and output bottlenecks, respectively.