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Human Capital, Firm Capabilities, and Innovation

Author

Listed:
  • Ajay Bhaskarbhatla

    () (Erasmus School of Economics, ERIM)

  • Deepak Hegde

    () (New York University)

  • Thomas (T.L.P.R.) Peeters

    () (Erasmus School of Economics, ERIM; Tinbergen Institute, The Netherlands)

Abstract

Are differences in inventor productivity due to differences in inventors’ skills or differences in the capabilities of the firms they work for? We analyze a 37-year panel that tracks the patenting of U.S. inventors and find strong evidence for serial correlation in inventors’ productivity. We apply an econometric technique developed by Abowd, Kramarz, and Margolis (1999) to decompose the contributions of inventors’ human capital and firm capabilities for productivity. Our estimates suggest human capital is 4-5 times more important than firm capabilities for explaining the variance in inventor productivity. High human capital inventors work for firms that have (i) other high human capital inventors, (ii) superior financial performance, and (iii) weak firm-specific invention capabilities. On the margins, managers should emphasize selecting talent rather than training workers to enhance innovation performance.

Suggested Citation

  • Ajay Bhaskarbhatla & Deepak Hegde & Thomas (T.L.P.R.) Peeters, 2017. "Human Capital, Firm Capabilities, and Innovation," Tinbergen Institute Discussion Papers 17-115/VII, Tinbergen Institute.
  • Handle: RePEc:tin:wpaper:20170115
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    File URL: https://papers.tinbergen.nl/17115.pdf
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    References listed on IDEAS

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    Cited by:

    1. Nagler, Markus & Sorg, Stefan, 2019. "The Disciplinary Effect of Post-Grant Review," Rationality and Competition Discussion Paper Series 155, CRC TRR 190 Rationality and Competition.
    2. Markus Nagler & Stefan Sorg, 2019. "The disciplinary effect of post-grant review - causal evidence from European patent opposition," CESifo Working Paper Series 7599, CESifo Group Munich.

    More about this item

    Keywords

    Human Capital; Capabilities; Innovation; Matching; Competitive Advantage;

    JEL classification:

    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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