SOCIAL CAPITAL AND INSTITUTIONAL QUALITY AS FACTORS OF INNOVATION: EVIDENCE FROM EUROPE

This paper investigates how different dimensions of social capital and institutional quality are related to innovation activity and its utilisation. For reasons of data availability, previous studies have included mainly patenting data. This study complements the previous studies by analysing smaller sample, but including more indicators of innovation. Data for 29 European countries are analysed. As an alternative to usual analysing methods, cluster analysis is used to overcome the problem of small sample. First, cluster analysis is conducted to examine the similarities and differences in various aspects of innovation activity and utilisation of innovations. Next, the social capital and institutional quality are considered as possible factors of innovation next to the R&D and human capital. The findings supported the idea that different dimensions of social capital have a different impact on innovation activity; the results concerning the utilisation of innovations were mixed.