Training and innovation

It was not until (Becker, 1964) that firm training was recognized as important in the economics literature. From a neoclassical perspective Becker reasoned that specific training was economically viable for firms as they could capture the rents. The theory posited that provision of general training was beyond the scope of the firm, since workers would expect a wage equal to their marginal product. Otherwise, they would leave the firm to obtain the market wage. Thus firms would never compensate employees for general training. Later theoretical research posited that firms would indeed pay for general training (Acemoglu, 1997; Redding, 1996). The bulk of empirical training research centers on returns to productivity and wages. A small proportion of this research investigates the effect of training on innovation. Most innovation studies find that training has a positive albeit minor effect on product and process innovation. Due to survey differences, there is wide variation in training variables. Sometimes authors use a binary variable to indicate if training is offered, others use training expenditure per employee, others try to construct an intangible "human capital stock" using historical training expenditures. The content of training also differs, as some studies simply report that "on-the-job" training occurred, while others count only external expenditures on training, while others count only internal expenditures on training. It is rare to find data on reimbursement to employees for external courses towards general training. Little research exists that breaks innovation into finer categories such as "firm-first" vs "market-first" vs "world-first"; "substantially improved" vs "new". One such study by (Cozzarin & Percival, 2021) finds that internal firm (classroom) training impacts improved products, new processes and improved processes. The authors find no effect of training on new product innovation. More research needs to consider the effect of specific training and general training jointly on innovation. Future research should try to correct for estimation bias and acknowledge country-specific, temporal-specific and survey-specific biases.