Abstract

This paper explores the relation between work organisation, employees’ education and firms’ innovation capabilities. We argue that, to improve their innovation capabilities, firms should focus more on work organisation, particularly on practices aimed at human capital development by increasing the firm-specific technical skills, engagement and motivation of employees. Moreover, we examine firms’ innovation capabilities from two perspectives: the type of innovation outcomes (product or process innovation) and the strategies of innovation development (generation in-house, generation in cooperation or imitation/adoption). We place greater emphasis on the latter, and thus on the distinction between innovation processes based on internal generation and those that instead rely on external sourcing, which adds a more comprehensive view about the level of firms’ innovation capacity. Our results confirm that, for firms that whish to be more innovative, work organisation matters more than the education level of the workforce.