Exploring the Relationship Between Innovation Efficiency and Nation Brand Strength: a Panel Study

This study examines the economic dimensions of knowledge and innovation by investigating the connection between innovation efficiency and nation brand strength— two critical factors in the economic development of knowledge economies. Although the link between innovation efficiency and nation brand strength has not yet been scientifically validated, prior research on innovation efficiency has identified relevant sub-factors, such as innovation inputs and outputs, which can be applied to assess nation brand performance. The study seeks to answer two key questions: Is there a direct or indirect relationship between nation brand strength and these innovation sub-factors? And if so, is this relationship affected by a country’s average income level (measured by GDP per capita)? The findings indicate that GDP per capita impacts both the direct relationship between innovation outputs and nation brand strength and the indirect relationship between innovation inputs and nation brand strength, mediated by innovation outputs. Moreover, GDP per capita has a stronger effect on nation brand strength in low- and medium-income countries than in high-income ones. Understanding these relationships can help policymakers refine their nation brand management strategies by focusing on improving innovation inputs, outputs, or both. These insights advance the theory and practice of national innovation systems and innovation efficiency, as well as contribute to the research on nation branding by analyzing the long-term relationship between innovation sub-factors and nation brand strength across 49 countries from 2011 to 2019.