Firm-Level Human Capital and Innovation: Evidence from China

38 Pages Posted: 27 Mar 2017

See all articles by Xiuli Sun

Xiuli Sun

Southwestern University of Finance and Economics

Haizheng Li

Georgia Institute of Technology - School of Economics

Vivek Ghosal

Rensselaer Polytechnic Institute; Center for Economic Studies and Ifo Institute for Economic Research (CESifo)

Multiple version iconThere are 2 versions of this paper

Date Written: March 06, 2017

Abstract

Understanding the factors that may produce a sustained rate of innovation is important for promoting economic development and growth. In this paper, we examine the role of human capital in firms’ innovation by using a large sample of manufacturing firms from China. We use two firm-level datasets from China: one from metropolitan cities, and one from provincial small and medium sized cities. Patent applications are used as the measure of innovation. Human capital indicators used include skilled human capital (number of highly educated workers), general manager’s education and tenure, and management team’s education and age. We find that skilled human capital has a significant positive effect on firms’ innovation, while the management team’s age has a significant negative effect on innovation. The General Manager’s tenure plays a significant positive role in firm innovation in metropolitan cities, while it is the General Manager’s education that has a positive and significant effect on firms’ innovation in small and middle cities. We also find that the effect of R&D on patents is insignificant for firms in large cities, but it is positive and significant in the smaller and medium sized cities. We conclude by noting some policy issues for promoting innovation in developing economies.

Keywords: human capital, education, innovation, patents, R&D, economic development, Asia, China

JEL Classification: J240, I250, D210, D220, L130, O320, O330

Suggested Citation

Sun, Xiuli and Li, Haizheng and Ghosal, Vivek, Firm-Level Human Capital and Innovation: Evidence from China (March 06, 2017). CESifo Working Paper Series No. 6370. Available at SSRN: https://ssrn.com/abstract=2941397

Xiuli Sun

Southwestern University of Finance and Economics ( email )

55 Guanghuacun St,
Chengdu, Sichuan 610074
China

Haizheng Li

Georgia Institute of Technology - School of Economics ( email )

217 Habersham
Atlanta, GA 30332
United States

Vivek Ghosal (Contact Author)

Rensselaer Polytechnic Institute ( email )

110 8th Street
Troy, NY 12180
United States
518-276-3868 (Phone)

HOME PAGE: http://www.economics.rpi.edu/pl/people/ghosal

Center for Economic Studies and Ifo Institute for Economic Research (CESifo)

Poschinger Str. 5
Munich
Germany

HOME PAGE: http://www.cesifo.de

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