Innovation and Skills Requirements in Post-transition Economies

Innovators are more likely to ensure strong foundations for economic growth and contribute positively to employment. Yet, one of the important innovation inputs is the continuous upgrading of the innovating enterprise human capital. Innovative firms are more likely to report having problems finding adequate skills on the job market. Previous studies have established that innovative firms require a workforce with modern, higher-order skills, that are frequently unavailable on the local labour market. This leads to more specific training requirements for the innovating firms. Based on the most recent The World Bank Enterprise Survey dataset, the paper explores different aspects of inadequate human capital on innovation propensity in post-transition societies. Specifically, the impact of the inadequately educated workers, provision of on-the-job training and the share of high-skill workers on firm innovation propensity are analysed. In addition to firm characteristics, the paper explores aspects of the managers’ human capital, such as years of experience and gender of the top manager. Analysis confirms differences between innovating and non-innovating firms and differences between countries belonging to the Central and South-European region compared to the Commonwealth of Independent States region.