The Role of Human Capital: Evidence from Patent Generation

Abstract

Firms exhibit persistence in innovation output. This paper focuses on the role played by individual inventors. Compared to firm organizational capital, human capital embedded in inventors explains a majority of the variation in innovation performance but much less in innovation style. Inventors contribute more when they are better networked, in firms with higher inventor mobility, and in industries in which innovation is more difficult. Additional tests suggest that our main findings are unlikely driven by inventors’ endogenous moving. This paper highlights the importance of human capital in enhancing firm innovation and sheds new light on the theory of the firm.

Keywords: Organizational capital, Human capital, Firms, Inventors, Innovation persistence

JEL Classification: G30, G32, O32