WEIDONG WANG et al: EVALUATION OF CHINA'S PROVINCIAL REGIONAL INNOVATION PERFORMANCE AS … Evaluation of China's Provincial Regional Innovation Performance as Exemplified by Beijing, Shanghai, Jiangsu, Guangdong, and Zhejiang Weidong Wang* Rongmian Huo School of Humanities and Social Sciences China Jiliang University Hangzhou, Zhejiang Province, 310018, China e-mail: [email protected] *Corresponding author Abstract — In this work, China's provincial regional innovation performance is evaluated using the index system in the Annual Report of Regional Innovation Capability of China (data for 2014). Three theoretical hypotheses are proposed based on a summary of existing research. The first one states that the innovation capability of an enterprise is closely related to the regional innovation performance. The second hypothesizes that knowledge creation capacity is directly proportional to regional sustainable development indices. The third suggests that knowledge acquisition capacity is positively correlated with an enterprise's capacity to improve the technological and international competitiveness of regional industries. Principal component analysis (PCA) is subsequently used to establish a model using the Stata software package (v12). The relationships between China's regional innovation performance and some relevant indices are revealed for five provinces and cities in China. Therefore, the hypotheses are essentially verified by our research conclusions and three policy suggestions for improving regional innovation performance are also presented. Keywords - regional innovation; principal component analysis; performance evaluation; Stata software. by the Monitoring Center of the National Bureau of Statistics I. INTRODUCTION of China for Economic Prosperity. The Chinese Academy of Science and Technology for In recent years, there has been an increase in the Development defines 'regional innovation capability' as the independent innovation capacity, strength, and capacity of a region to transform knowledge into new competitiveness of science and technology in China's products, processes, and services. Their evaluation is a provinces. In such a context, the support and guiding effect comprehensive one based on five indices: knowledge of technology on regional economic and social development creation, knowledge acquisition capability, the enterprise's has improved significantly. This is especially the case for the innovation capacity, innovation environment and developed provinces in eastern China, e.g. the Yangtze River management ability, and innovation performance. Evaluation delta region. However, compared with developed countries, is conducted using a comprehensive weighted method. After the capacity and performance of regional innovation in the basic indices are nondimensionalized, layered integration China are still somewhat deficient. Revealing the key factors is carried out using weights derived by experts. The value that promote regional innovation, and proposing thus obtained quantifies the aggregate utility value of the countermeasures and suggestions to accelerate regional innovation capacity of each of the provinces and cities innovation, have a positive role in promoting the considered [3]. development of regional innovation. To facilitate The Report of Independent Innovation Capability of achievement of this aim, one first needs to scientifically and China's Enterprises from the National Bureau of Statistics objectively evaluate the regional innovation capacities of constructs an evaluation index system for independent China's provinces. Then, any disparities in regional innovation capability of enterprises from the perspective of innovation capacities of the relevant provinces can be technological innovative ability. The system includes four compared, and the correlations among the relevant first-level indices, i.e. potential resources, evaluation, innovation indices analyzed using well-established methods production capability, and an environmental index for of quantitative analysis. technological innovation. Currently, the most authoritative research reports The Report is published annually since 2001. It is a detailing innovation capability include the Annual Report of comprehensive and continuous research report concerned Regional Innovation Capability of China (hereafter with the construction of China's regional innovation system. abbreviated to “the Report”) [1] by the Chinese Academy of It has tracked and evaluated China's regional innovation Science and Technology for Development, and the Report of capacity for 14 years with high authority, sustainability, and Independent Innovation Capability of China's Enterprises [2] advancement. Thus, it constitutes an invaluable reference for DOI 10.5013/IJSSST.a.17.33.37 37.1 ISSN: 1473-804x online, 1473-8031 print WEIDONG WANG et al: EVALUATION OF CHINA'S PROVINCIAL REGIONAL INNOVATION PERFORMANCE AS … objectively evaluating the current level and progress made in performance are mainly focused on three aspects. The first regional innovation capability. Guided by the document: involves discussing performance evaluation systems and Report of International Competitiveness by the index construction for regional science and technology internationally renowned Institute for Management innovation. Numerous scholars have screened indices related Development (Lausanne, Switzerland), scholars evaluate to regional technological innovation performance based on China's regional innovation capability in the report based on connotations and elements of the performances. In addition, five main aspects. The five aspects include: knowledge they also tend to construct an extensive evaluation system creation capability, knowledge flow capability, the based on four aspects including input and productive, enterprise's technology innovation capacity, innovative diffusion, and supporting capacity for technological environment, and economic performance of the innovation. innovation [5]. The data in the report is entirely collected from published Secondly, scholars have studied different methods of statistical yearbooks and government reports (mainly the evaluating the performance of regional science and China Statistical Yearbook, China Statistical Yearbook on technological innovations. For example, empirical research Science and Technology, China Statistics Yearbook on High has been carried out on regional innovation performance in Technology Industry, China Industry Statistical Yearbook, China based on analytical hierarchy processes, fuzzy and Report of Statistics and Analysis of China Science and mathematics, and factor analysis [6]. In addition, various Technology Papers). This helps to guarantee the accuracy scholars have conducted research on evaluating the and testability of the data. performance of regional science and technological Based on index data taken from the Report, in this work, innovations using data envelopment analyses, extension a principal component analysis (PCA) is made of the synthesis evaluation methods, and PCA [7]. regional innovation capabilities of the top five provinces and Third, comprehensive research has been carried out on cities in China (Jiangsu, Guangdong, Beijing, Shanghai, and evaluating the technological innovation performance within Zhejiang). By doing so, we attempt to reveal the various, or particular, provinces of China. For example, the relationships between China's regional innovation annual reports on China's regional innovation published by performance and the relevant influencing factors [4]. The the Chinese Academy of Science and Technology for rest of this study consists of the following five parts. Section Development evaluate innovation performance in various 2 is a literature review. Section 3 constructs the PCA provinces based on five aspects. These include knowledge evaluation indices and overall model based on the Report. creation, knowledge acquisition, the enterprise's technology Section 4 compares the principal components of the indices innovations, environment and management of technological for regional innovation capability so as to show the innovation, and economic benefits of the innovation. relationship between regional innovation performance and The studies on regional innovation capability in the the relevant factors. Policy suggestions are proposed international literature mainly underline the regional according to our research conclusions in Section 5. Section 6 innovation system or efficiency. Nelson [8], an American summarizes the conclusions and puts forward prospective scholar, evaluated the innovation systems of 15 countries new research directions. from the point of view of R&D financial resources and To begin with, however, we concisely summarize our allocation, the function of universities, and government intent to propose the following theoretical hypotheses: support that influences innovation. Cooke et al. [9] studied Hypothesis 1: An enterprise's innovation capability the correlation between differences in regional innovation is closely correlated with regional innovation capability and research, education, and technology performance. transformation system. They proposed that regional Hypothesis 1.1: Comprehensive indices for innovation capability depends on regional decision-making enterprise innovation are positively correlated with capability, availability of financial resources, and policy regional macroeconomic indices. orientation. Lawson and Lorenz [10] compared potential Hypothesis 1.2: