The role of human capital in identifying the drivers of product and process innovation: empirical investigation from Italy

Abstract

Economists recognize that the local availability of higher human capital represents significant knowledge spillovers, especially for innovation process. This research question is tested on a sample of Italian manufacturing companies, originally edited by Mediocredito Centrale and currently carried out by the Capitalia Banking Group’s Research Department over two waves: 2001–2003 and 2004–2007. The aim of our work is to investigate the role of human capital (measured as educational level) for innovation process in particular contexts, where the highest educated people and the highest innovation levels are differently located. To this end, we select the Italy country, characterized by a relevant North-South economic divide. Our analysis suggests that the positive spillovers can arise because the firms generate more technology innovation than those located in areas with higher educational attainment workforce. The more efficient macro regions who produce highly skilled graduates have, in a sense, saturated their contribution on firms’ innovation (i.e. that have already reached their steady state). The role of some factors (size, technological and territorial) to the probability of firm’s innovation has also been investigated.