The Influence Of Human Capital On The Innovativeness Of Firms

Abstract

Despite the importance of innovation and innovativeness within today’s economy, we know little about how intellectual capital of firms can contribute to a superior innovation at the firm’s level. Based on resources and knowledge-based views of firms we developed a hypothesis linking three dimensions of human capital (component of the intellectual capital) and the innovativeness of firms. As a representation of the firm’s innovativeness, we consider the product, process and management innovation. Using a survey from 68 firms working on the auto components sector, established in the Northern of Spain and Northern of Portugal, we found firstly, that innovativeness has two main dimensions, perfectly differentiated, the product-process innovation and the management innovation; secondly that the human capital dimensions (formation and knowledge creation, innovative behave, and incentives to innovation) influences differently each type of innovativeness capacity. We found that the different human capital dimension influences directly, only, the product-process innovativeness. More specifically only the innovative behavior and the incentives to innovation influence the product-process innovativeness. The formation and knowledge creation dimension doesn’t influence directly either the product-process innovativeness or the management innovativeness. Moreover, none of the human capital dimensions considered influence the management innovativeness directly. These results highlight the importance of human capital on innovative performance, and it allows identification of  the most important dimensions that influence directly the different innovativeness capacities and more broadly, highlight the value of intellectual capital as a competitive advantage in contemporary times.