Examining the Interplay Between Innovation Index, Innovation Efficiency and Sustainability Index: A Cross-Group Analysis of G7 and E7 Countries

Abstract

Purpose: The main purpose of this study is to examine the innovation, sustainability and innovation efficiencies of G7 and E7 countries and to address the relationship between them. The investigation focuses on exploring the potential impact of innovation productivity on the sustainability index in both developed and emerging economies, along with examining potential underlying factors influencing this relationship. Methodology: The research employs Data Envelopment Analysis (DEA) to assess the innovation efficiency. This analysis considers two innovation outputs set against five inputs. Statistical methods such as t-test and correlation analysis are also used to investigate the interplay between innovation efficiency and the sustainability. Findings: The findings of this study reveal interesting results. First, no significant difference is observed regarding innovation efficiency between G7 and E7 groups. For the G7 countries, there is a positive correlation between the sustainability index and innovation efficiency, suggesting that more efficient innovation is associated with sustainability. Contrarily, there is a negative correlation between these indices in E7 countries, implying that effective innovation can lower the sustainability index. Originality: This study contributes novel insights into the relationship between innovation and sustainability by considering the G7 and E7 countries. Although various countries are evaluated in the literature, no comparison has been made for these two groups. Also, the identification of opposing correlations between two indices in developed and emerging economies constitutes a significant contribution to the literature.