Building innovation capacity: The role of human capital formation in enterprises

This paper describes a project which seeks to identify the role of human capital formation in promoting innovation in Australian enterprises and the ways in which enterprises can improve their human resource management and learning and development practices to improve their innovation performance. There are a number of factors that affect enterprises' ability to innovate. These include internal factors such as the ability to detect technological changes in the environment, the development of core competencies from which innovation can developl and external factors such as the maturity of the market which the enterprise serves and the impact of government policy to stimulate innovation. Thus the ability of enterprises to innovate depends on the effective management of human resources and in particular, the learning and development practices that enable enterprises to increase the skills of workers to innovate (human capital formation). Studies in Denmark and Spain have shown that better