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Which skills contribute most to absorptive capacity, innovation and productivity performance? Evidence from the US and Western Europe

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  • Geoff Mason
  • Ana Rincon-Aznar
  • Francesco Venturini

Abstract

Skills are widely recognised as central to absorptive capacity, that is, firms’ ability to identify and make effective use of knowledge, ideas and technologies that are generated elsewhere. But identification of the specific levels of education and skills that contribute most to the development of absorptive capacity is often hampered by the use of skill measures as proxies for absorptive capacity itself. Drawing on a cross-country industry-level dataset, we retain separate measures of key components of absorptive capacity, namely, skills, R&D investments and openness to foreign trade and investment. We then estimate a system of structural equations in order to evaluate the extent to which different levels of skill contribute to innovative output (measured by growth in patenting) and subsequently to growth in productivity. We find important roles for both high-level skills and upper intermediate (technician-level) skills in converting the knowledge sourcing opportunities provided by openness into innovative output. In final stages of production (making use of innovative output), productivity growth in countries near to the technological frontier is enhanced not just by high-level and upper intermediate skills but also by the skills of the workforce as a whole.

Suggested Citation

  • Geoff Mason & Ana Rincon-Aznar & Francesco Venturini, 2020. "Which skills contribute most to absorptive capacity, innovation and productivity performance? Evidence from the US and Western Europe," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 29(3), pages 223-241, April.
  • Handle: RePEc:taf:ecinnt:v:29:y:2020:i:3:p:223-241
    DOI: 10.1080/10438599.2019.1610547
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    Cited by:

    1. Damian Grimshaw & Marcela Miozzo, 2021. "Human Capital and productivity: a call for new interdisciplinary research," Working Papers 006, The Productivity Institute.
    2. Shahid, Pirzada Syed Rizwan, 2023. "Founder's Human Capital and the Entrepreneurial Process Duration," OSF Preprints yf6mg, Center for Open Science.
    3. Prokop, Viktor & Hajek, Petr & Stejskal, Jan, 2021. "Configuration Paths to Efficient National Innovation Ecosystems," Technological Forecasting and Social Change, Elsevier, vol. 168(C).
    4. Martin Falk & Eva Hagsten, 2021. "Innovation intensity and skills in firms across five European countries," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 11(3), pages 371-394, September.
    5. Paul Lewis, 2020. "Developing Technician Skills for Innovative Industries: Theory, Evidence from the UK Life Sciences Industry, and Policy Implications," British Journal of Industrial Relations, London School of Economics, vol. 58(3), pages 617-643, September.

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