Singapore fell three spots to place eighth in this year's Global Innovation Index, though it retains its lead among countries in South-east Asia, East Asia and Oceania.
Singapore ranks top for government stability and effectiveness as well as the ratio of foreign tertiary students to the total number of tertiary students.
But the report released yesterday noted that Singapore fell in indicators such as ecological sustainability, business sophistication and the inflow of foreign direct investment.
The relocation of technology hardware and equipment company Broadcom back to the United States also caused a dip in the rankings, added the report by Insead, Cornell University and the World Intellectual Property Organisation.
Broadcom was the largest spender on research and development in Singapore until last year, the report said.
Executive director for global indices at business school Insead, Dr Bruno Lanvin said Singapore's dip in the rankings was caused by a combination of factors, including Broadcom's relocation.
"Continued efforts made in Singapore around education, such as coding and artificial intelligence, and innovation, such as sandpits and incubators, are bound to improve the country's output score in the future," added Dr Lanvin, who is also co-author of the annual rankings.
TOP 10 COUNTRIES
3. United States
4. The Netherlands
The report noted that the innovation secret of small economies, such as Singapore, Hong Kong and Luxembourg, is to act as regional hubs for trade and investment.
Hong Kong is ranked 13th in the world while Luxembourg is ranked 18th.
They are also strong in financial services, it added, pointing out that the economies' high scores demonstrate an excellent environment that is supportive of innovation, has good regulatory quality and is easy to start a business.
One way for the Republic to achieve its aim to be a key node along the global innovation supply chain is to help enterprises innovate and scale up, the report added.
The index measures 129 economies based on 80 indicators such as intellectual property filing rates, mobile-application creation and education spending.
Singapore ranked behind Switzerland, Sweden, the US, the Netherlands, Britain, Finland and Denmark in the overall global ranking, with Germany and Israel rounding up the top 10 countries.
It was placed before South Korea and Hong Kong among economies in South-east Asia, East Asia and Oceania.