When Numbers Define Innovation - A comparative field study comparing Global Innovation Index rankings with firm-level innovation realities in Japanese and Swedish manufacturing firms

Abstract

This thesis examines the relationship between national-level innovation measurement and firm-level innovation practices. It does so by comparing the innovation realities of manufacturing firms in Japan and Sweden with their respective countries' Global Innovation Index (GII) scores. Although both countries are recognised as advanced industrial economies with strong national innovation systems, their scores differ in the GII, where Sweden consistently ranks among the world’s leading innovation economies while Japan ranks lower. The study investigates whether macro-level innovation indicators such as the GII accurately reflect innovation performance within firms. Drawing on innovation theory, the National Innovation Systems framework, and literature on innovation capacity and organisational capabilities, the thesis adopts a qualitative comparative field research design. Empirical data was collected through semi-structured interviews with manufacturing firms in Sweden and Japan. The data was then analysed in relation to selected GII pillars: human capital and research, infrastructure, business sophistication, and knowledge and technology outputs. The findings indicate that the GII captures several important structural conditions that support innovation, including education, research investment, and collaborative networks. However, the study also demonstrates that macro-level indicators fail to fully account for how innovation actually occurs at the organisational level. In particular, they do not sufficiently capture organisational processes, managerial practices, and firm-specific capabilities that influence innovation performance in practice. Among the interviewed firms, the Swedish firms were characterised by collaborative cultures, flatter hierarchies, and decentralised decision-making, whereas the Japanese firms emphasised long-term planning, continuous improvement, and process-oriented innovation practices. Despite these differences, firms in both countries demonstrated strong innovation capabilities that were not always reflected in national rankings. The findings suggest that innovation performance cannot be fully understood through aggregated national indicators alone. This is because certain aspects of innovation are difficult to reduce to a single number. Instead, innovation emerges through the interaction between national innovation systems and firm-level organisational capabilities. The study contributes to innovation research by conceptualising the micro-macro gap in innovation analysis and highlighting the limitations of relying solely on quantitative benchmarking frameworks such as the GII when evaluating innovation performance.