Utilizing Rasch Analysis to Establish the Psychometric Properties of an Economic Innovation Capacity Construct

Lauritz Mills, Ph.D

In today’s changing and highly competitive business environment, innovation and technology clusters are recognized as a powerful competitive tool. To be competitive, countries must improve their economic ecosystem to produce a highly skilled and educated workforce, enhance the quality of place to attract investments, provide services and infrastructure to support globally competitive firms, and develop more robust entrepreneurial and technological capacity among firms and industry. Measuring competitiveness is necessary to fully understand variables affecting countries’ and regions’ economic development. Yet, there is a lack of a psychometrically valid scale for innovation capacity construct for small island developing states. The purpose of this paper was to develop a reliable and valid scale of measurement for innovation capacity. The test comprised 25 items administered to 74 policymakers, business leaders, and economic development practitioners in the U.S. Virgin Islands. The data were analyzed using Rasch techniques to explore the instrument’s dimensionality, the items’ difficulty, the item’s fit, reliability, and internal construct validity. The dimensions included specialized skills, infrastructure facilities, technology firms, venture capital, supporting institutions and network activities, competitors, and governance.