Human Capital and Firm Innovation: New Evidence from ASEAN Countries

The study explores the role of human capital in firm innovation in the ASEAN countries. Different ordinal logistic regression models are utilized to estimate the data set from the World Bank’s Enterprise Surveys. The results show evidence supporting the positive role of general human capital (i.e., employee general education and top manager’s prior work experience in the current sector) in the likelihood of firm innovation at a higher degree of radicalness. Furthermore, specific human capital (i.e., employee training) is also positively related to the propensity to innovate at a higher level of radicalness. Given the results, the study suggests that there should be more investments in training, especially formal training for employees at the firm level, and at the macro level; the governments should channel more resources into education to boost innovation.