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

Salvatore Farace and Fernanda Mazzotta ()

Journal of Innovation Economics, 2015, vol. n°16, issue 1, 39-71

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

Keywords: Innovation; Knowledge; Small-Medium Firms; Human Capital; Networks; Econometric Models for Qualitative Dependent Variables (search for similar items in EconPapers)
JEL-codes: C25 D83 J24 L1 O31 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (13)

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