Human Capital and Propensity to Protect Intellectual Properties as Innovation Output: the Case of Nigerian Manufacturing and Service Firms

Manufacturing and service (MS) firms are considered to be one of the most important forces of transforming an economy into a knowledge-based one. Using knowledge production model, this study examines the role of human capital in influencing Nigerian MS firms’ propensity to innovate. The study applies binary probit regression model to World Bank’s merged 2014 business enterprise and follow-up innovation surveys for Nigeria. The overall results reveal that human capital significantly drives the chances of the firms to innovate in Nigeria. Specifically, top manager with postgraduate education has significant and positive effect on the firms’ probability to protect all statutory intellectual properties. Similarly, the number of skilled workers significantly and positively determines the chances of the firms to apply for patent and utility model. Reward to production staff based on performance significantly encourages the firms to apply for patent, trademarks and copyright. Investing in Research and Development (R&D) activity also encourages the firms to apply for only patent. Government support is also found to be of importance in driving the chances of the firms to apply for patent and trademark. Whereas skilled labour and reward to production staff are more important to manufacturing firms’ patent application, government support is more essential to service firms’ patent application. The firms’ probability to use each strategy to intellectual property protection is complementary to the most related strategy. The policy implications of the study suggest that much attention should be directed to the significant factors in formulating innovation-based human capital policy.