The Impact of Training on Innovation

Abstract

The firm’s stock of human capital is an important determinant of its ability to innovate. As such, any increase in this stock through firm-sponsored training might lead to more innovation. The author tests this hypothesis using detailed data on firms’ human capital investments and innovation performance from the Canadian Workplace and Employee Survey, 1999–2006. The regression results, including workplace fixed effects and allowing for time-varying productivity shocks, demonstrate that more training leads to more product and process innovation, with on-the-job training playing a role that is as important as classroom training. Results from an event history analysis show, however, that this impact fades over time.