Principal Topic

We focus on the question of how human capital and social capital have an impact on a country’s level of innovation. We examine the impact of human capital, i.e., one’s general ability and skills in terms of education, physical condition and overall well-being, on innovative activities within a country (Becker, 1964; Coleman, 1988). We conceptualize social capital as comprising trust, associational activity, and norms of civic cooperation (Knack & Keefer, 1997; Paxton, 1999). We build on previous research on social capital and test hypotheses that speak to its role in furthering innovation across countries. Unlike previous studies that examined differences in the levels of human capital and social capital across communities, we develop and empirically test a theoretically grounded model that relates human capital and social capital to innovation at the societal level across multiple countries.

Method

In testing our hypotheses we use three secondary data sources. We assess the level of human capital using the Human Development Index (HDI) provided by the United Nations World Development Program; we measure the level of social capital within a country based on data provided by the World Value Survey; and we use data gathered by the World Bank to measure country-level innovation (i.e., the number of patent applications filed and the percentage of high-technology export relatively to total manufactured export). We test our hypotheses using regression analyses.

Results and Implications

We find that human capital, generalized trust and institutional trust are positively related with country-level innovation. We find no effect of associational activity on country-level innovation, whereas we find a negative relationship between norms of civic behavior and high-technology export. For researchers, this study may indicate how social capital theory may be integrated with research on cross-cultural comparisons of innovation activity. From a practice and policy perspective, our study helps to clarify the factors leading to or inhibiting entrepreneurial activity. Our results suggest that frequent interactions based on trust within a country’s network structure may play a crucial role for successful new product development.

CONTACT: Dirk De Clercq, The Darla Moore School of Business, Management Department, University of South Carolina, 1705 College Street, SC 29208; (T) 803-777-5969; (F) 803-777-6782; decldip3@smail.badm.sc.edu