Why Are Workers at Some Companies More Innovative Than Others?
What’s in the “secret sauce” of innovation: a company’s capabilities, or the inventors themselves? Researchers at NYU Stern School of Business and Erasmus University used a 37-year panel of U.S. patenting activity encompassing the inventions of over 700,000 inventors at 2,500 publicly listed U.S. corporations to answer this question and determine whether the contribution of firms or inventors leads to more innovative activity.
Key takeaways include:
- While firm-specific capabilities (corporate culture, organization processes, incentive schemes, etc.) matter, inventors’ human capital is 5-10 times more important.
- Highly talented inventors are attracted to join companies that employ other talented inventors.
- Relative to strategies based on attracting and retaining top talent, innovation strategies based on strong firm-specific capabilities are rare and unlikely to endure.
This research is forthcoming in Management Science.