Measurement of the knowledge economy is very much related to quantification of innovation performance as knowledge creation is one of the key elements of innovativeness and innovation system influences transition to a knowledge-based economy.
The relevance of each appropriation mode depends on such factors as the degree of innovativeness, the type of innovator and the general market environment, which implies that the importance of IPRs is limited to specific business contexts.
As mentioned previously, without adequate thresholds of human capital, the level of innovativeness and rate of innovation in the economy are likely to be severely debilitated and therefore inadequate to close the gap with the median middle-income countries.
In view of these requirements, we propose a quantitative measurement of innovation, focusing on the benchmarking of innovativeness of firms belonging to two geographic regions, with diverse innovation characteristics.
Theoretically grounded in Roger's (1995) diffusion of innovation theory, the concept of innovativeness has been developed to address how the characteristics of the adopter affect the process of purchasing new products or services (Midgley and Dowling 1978; Foxall 1988; Im et al. 2003).
We propose a quantitative measurement of innovation, focusing on the benchmarking of innovativeness of firms, which can be applied easily in practice, in order to benchmark the innovation strengths and weaknesses between different regions and apply consequent policy actions.
Characteristics of innovativeness that determine success to product innovation and which increase its possibility of successful diffusion and adoption are identifies: Innovation which is unique experience three to five times more success than the innovation which does not stand out (Cooper 2001).
Although this innovativeness construct captures necessary psychometric properties of innovativeness, it lacks the ability to predict actual innovative behavior or intentions, because consumers who are innovative in one product category might not be innovative in others (Hoffmann and Soyez 2010).
Although the diffusion of innovation theory suggests five adopter categories according to their degree of innovativeness, this approach lacks theoretical justification and, more importantly, it makes a critical assumption of a normal distribution of adopters that needs empirical validation.
