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

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

Determinantes Da Inovação Em Micro E Pequenas Empresas: Uma Abordagem Gerencial

“…Workforce skills become more important as the awareness of the role of internal and external networks in the organization grows (Farace & Mazzotta, 2015). The establishment of networks promotes the sharing of knowledge between firms (Jong & Vermeulen, 2006), sharing the risks associated with innovations, which are highly onerous and risky to be undertaken alone (Love & Roper, 2001).…”

Inovação em Micro e Pequenas Empresas: Recursos e Capacidades

“…Some empirical studies in SMEs corroborate these findings. Farace and Mazzotta (2015), Kim et al (2018) and Martínez-Román and Romero (2017) indicate that networks contribute positively to innovation capability, and the access to knowledge can improve organizational processes. These studies suggest that sharing information with stakeholders can develop processes, activities, and routines.…”

“…According to Farace and Mazzotta (2015), Laforet (2011) and Söllner (2010), innovation capability also depends on the employees' abilities. Thus, the construction of an innovative environment must begin with the recruitment process and pass through training and qualifications that encourage team autonomy.…”

Human Capital, Innovation and Internationalization of Micro and Small Enterprises in Rural Territory - a Case Study

“…Particularly for SMEs, the ability to obtain and exploit information is positively linked to the firms' human capital (skills, training, and experiences), which exerts a determinant influence in shaping absorptive capacity and determines the capability to access external sources of knowledge (Farace and Mazzotta, 2015). According to these authors, calling up the theory of industrial (Marshallian) districts, the new economic geography and the literature on networks, "the creation of knowledge and the adoption of innovation also depend on the relations that the firm has in its surrounding and delimitated territories such that the nature and the strength of networks around the firm become very important" (idem, p. 40).…”