Question

Exercise 2

An article in Business Harvard Review argues that the size of a company greatly affects the amount of innovation you see, not only in total but also when measured as innovation per employee. To illustrate the point, it discusses research on the relationship between the size of various cities and the total amount of innovation that occurs. Data illustrating the relationship is contained in the file innovation.xls(Table Below). How would you describe the relationship and what implications does it have?

Innovation

City #	Population of city	Total innovation index
1	5,400,000	29,000
2	2,950,000	5,000
3	1,413,270	1,575
4	18,107	9
5	13,281	5
6	38,441	12
7	240,789	151
8	2,040,000	4,000
9	581,536	252
10	4,013,366	9,900
11	60,241	12
12	47,456	10
13	723,189	791
14	384,603	171
15	201,157	80
16	3,620,000	7,900
17	208,307	163
18	44,145	20
19	709,171	741
20	18,028	10
21	4,391,122	15,000
22	97,801	55
23	920,458	589
24	72,574	16

Answer 1

As per given information,

X = Population of city

Y = Total innovation index

The correlation between population of city and total innovation index is 0.9058. i.e. X and Y are highly positively correlated. If X is increase, Y is also increase.

The regression model is -1208.1359 + 0.0037*X