Impact of Human Capital on Firm Innovativeness: Evidence from SMEs in Nigeria

Abstract

The capability to recognise and assess the competitive advantage of employees’ transferable and innovative attitude is a critical to firms and policymakers. This study evaluate the human capital (knowledge, experience, professional proficiency and cognitive abilities) and its influences to innovativeness of small and medium-size Nigerian companies. Accordingly, a sample of 320 SMEs aged between 5 to 20 years form four different sectors participated in the study. Moreover, Structural Equation Modelling (using Smart PLS) approach was applied to assess the measurement model and the relationships between the constructs. Consequently, the findings shows that all the human capital dimensions are positively related to SMEs ability to innovate. The research expand the innovation literature by confirming the influence of human capital on SMEs innovativeness in a developing nation (Nigeria). Moreover, this finding will help managers of SMEs on how to improve their firms’ ability to innovate by employing highly skilled and experience personnel in their respective organizations.