Absorptive Capacity and Innovative Performance: a Human Capital Approach

In relation to firms' innovative performance this study investigates the importance of human capital on the firms' absorptive capacity. The estimation of an ordered probit model including 1544 firms from the manufacturing and service industry in Denmark shows that the share of highly educated employees, application of human resource management practices within the firm, and development of a closer relationship with both vertically related actors and knowledge institutions, is not only positively correlated with the ability to innovate but also negatively correlated with the degree of innovative imitation. Finally, work experience among managers, heads of departments, and employees at the managerial level is negatively associated with the ability to innovate for science-based and ICT intensive firms, thus indicating the importance of updating the skills of the employees in these high-tech sectors.