Effects of different dimensions of social capital on innovative activity: Evidence from Europe at the regional level

This exploratory study investigates how different dimensions of social capital influence a region's innovative activity measured by patent applications. Human capital and R&D are also included in the analysis as factors of innovative activity. The novelty of the paper lies in the fact that for measuring social capital, instead of one overall index, six factors are constructed of 20 indicators using principal components analysis. Unlike many previous studies, this one uses the structural equation modelling approach instead of regression analysis in order to take into account the relationships between the factors of innovative activity. Regional-level data from Eurostat Regio and the European Social Survey are analysed. The findings provide strong support for the argument that social capital indeed influences innovative activity and furthermore, that different dimensions of social capital have dissimilar effects on innovative activity.