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The effect of human capital and networks on knowledge and innovation in SMEs

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  • Salvatore Farace
  • Fernanda Mazzotta

Abstract

This paper proposes a framework to analyze knowledge creation in traditional sectors and empirically test innovation probability and intensity in small and medium firms (SMEs). The underlying hypothesis is that human capital and networks favour ease of learning and promote absorptive capacity and knowledge, which in turn fosters innovation in SMEs in traditional sectors. The empirical evidence is based on an ad hoc survey of a representative sample of 462 manufacturing firms in a province in Southern Italy. A probit model is used to investigate the determinants of innovation while the intensity is analyzed with a Poisson regression. The results confirm that the human capital of entrepreneurs and workers as well as the networks inside the firm has a positive effect on innovation, and the firm?s production chain constitutes the most important external network in terms of knowledge and innovation. JEL Codes: D83, O31, J24, L1, C25

Suggested Citation

  • Salvatore Farace & Fernanda Mazzotta, 2015. "The effect of human capital and networks on knowledge and innovation in SMEs," Journal of Innovation Economics, De Boeck Université, vol. 0(1), pages 39-71.
    • Handle: RePEc:cai:jiedbu:jie_016_0039
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    2. Renata Braga Berenguer de Vasconcelos & Joséte Florencio dos Santos & Jackeline Amantino de Andrade, 2021. "Innovation in Micro and Small Enterprises: Resources and Capabilities," RAC - Revista de Administração Contemporânea (Journal of Contemporary Administration), ANPAD - Associação Nacional de Pós-Graduação e Pesquisa em Administração, vol. 25(2), pages 190106-1901.
    3. Pedro Oliveira & Jana Turčínková, 2019. "Human Capital, Innovation and Internationalization of Micro and Small Enterprises in Rural Territory - a Case Study," Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, Mendel University Press, vol. 67(2), pages 545-563.
    4. Zeting LIU & Blandine LAPERCHE, 2014. "Knowledge-capital formation and valorisation of French SMEs," Working Papers 39, Réseau de Recherche sur l’Innovation. / Research Network on Innovation.
    5. Joana Costa & Inês Amorim & João Reis & Nuno Melão, 2023. "User communities: from nice-to-have to must-have," Journal of Innovation and Entrepreneurship, Springer, vol. 12(1), pages 1-35, December.
    6. Adisu Fanta Bate & Esther Wanjiru Wachira & Sándor Danka, 2023. "The determinants of innovation performance: an income-based cross-country comparative analysis using the Global Innovation Index (GII)," Journal of Innovation and Entrepreneurship, Springer, vol. 12(1), pages 1-27, December.
    7. Ornella Wanda Maietta & Fernanda Mazzotta, 2018. "Firm Survival and Innovation: Knowledge Context Matters!," CSEF Working Papers 496, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    8. Marina Capparucci & Alina Verashchagina, 2016. "I divari territoriali nell?innovazione delle imprese italiane," QUADERNI DI ECONOMIA DEL LAVORO, FrancoAngeli Editore, vol. 2016(105), pages 81-114.
    9. Agata Sudolska & Justyna Łapińska, 2020. "Exploring Determinants of Innovation Capability in Manufacturing Companies Operating in Poland," Sustainability, MDPI, vol. 12(17), pages 1-21, August.
    10. Arnab Bhattacharjee & Ornella Maietta & Fernanda Mazzotta, 2023. "Spatial agglomeration, innovation and firm survival for Italian manufacturing firms," Spatial Economic Analysis, Taylor & Francis Journals, vol. 18(3), pages 318-345, July.
    11. Nagwan AlQershi & Zakaria Bin Abas & Sany Sanuri Mohd Mokhtar, 2019. "THE MEDIATING EFFECT OF HUMAN CAPITAL ON THE RELATIONSHIP BETWEEN STRATEGIC INNOVATION AND THE PERFORMANCE OF MANUFACTURING SMEs IN YEMEN," Organizations and Markets in Emerging Economies, Faculty of Economics, Vilnius University, vol. 10(1).
    12. Maietta, Ornella Wanda, 2015. "Determinants of university–firm R&D collaboration and its impact on innovation: A perspective from a low-tech industry," Research Policy, Elsevier, vol. 44(7), pages 1341-1359.

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    More about this item

    Keywords

    Innovation; Knowledge; Small-Medium Firms; Human Capital; Networks; Econometric Models for Qualitative Dependent Variables;
    All these keywords.

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities

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