Efficiency of intellectual capital generation: a DEA analysis of selected EU regions

Abstract

Intellectual capital generation has gradually been entrenched as a measure of firm and regional competitive advantage in this era of knowledge economy. Firms, regions and countries and even international organisations around the world have rigorously engaged in the creation of property rights for control and usage. However, as regional innovative performance has been directly connected with intellectual capital creation, we question whether regions with high innovation prowess efficiently employ the scarce financial and cognitive resources that are harnessed for the manifestation of intellectual capital and property rights. Hence, using a multi-stage DEA approach and data of ten (10) countries from European Innovation Scoreboard (2018), we aim to comparatively compute the efficiency scores of innovation leaders and strong innovators to reveal the efficiency of resource inputs. Results at the first-stage revealed a mixed efficiency performance amongst countries whilst second-stage analysis with intermediate inputs revealed a dominance of innovation leaders on the efficiency ranking but eventually innovative leaders were found to be generally efficient in financial and cognitive resources employed in intellectual capital generation. We further gave recommendations on way of bolstering efficiency scores of countries.