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Measuring the impact of innovative human capital on small firms’ propensity to innovate

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  • McGuirk, Helen
  • Lenihan, Helena
  • Hart, Mark

Abstract

The ability to identify and evaluate the competitive advantage of employees’ transferable and innovative characteristics is of importance to firms and policymakers. This research extends the standard measure of human capital by developing a unique and far reaching concept of Innovative Human Capital and emphasises its effect on small firm innovation and hence growth (jobs, sales and productivity). This new Innovative Human Capital concept encapsulates four elements: education, training, willingness to change in the workplace and job satisfaction to overcome the limitations of measurements used previously. An augmented innovation production function is used to test the hypothesis that small firms who employ managers with Innovative Human Capital are more likely to innovate. There is evidence from the results that Innovative Human Capital may be more valuable to small firms (i.e. less than 50 employees) than larger-sized firms (i.e. more than 50 employees). The research expands innovation theory to include the concept of Innovative Human Capital as a competitive advantage and determinant of small firm innovation; and distinguishes Innovative Human Capital as a significant concept to consider when creating public support programmes for small firms.

Suggested Citation

  • McGuirk, Helen & Lenihan, Helena & Hart, Mark, 2015. "Measuring the impact of innovative human capital on small firms’ propensity to innovate," Research Policy, Elsevier, vol. 44(4), pages 965-976.
  • Handle: RePEc:eee:respol:v:44:y:2015:i:4:p:965-976
    DOI: 10.1016/j.respol.2014.11.008
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    5. Koski, Heli, 2015. "Commercial success of innovation: the roles of R&D cooperation and firm age," ETLA Working Papers 30, The Research Institute of the Finnish Economy.
    6. Cantabene, Claudia & grassi, iacopo, 2018. "R&D cooperation in SMEs: the direct effect and the moderating role of human capital," MPRA Paper 87925, University Library of Munich, Germany.
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    8. Xiuli Sun & Haizheng Li & Vivek Ghosal, 2017. "Firm-level Human Capital and Innovation: Evidence from China," CESifo Working Paper Series 6370, CESifo Group Munich.
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