Effects of human capital on the relationship between export and firm innovation

Purpose This study aims to examine the effects of human capital, such as top managers and employees, on the relationship between export and firm innovation. Although the issue of how firms remain creative and competitive in international markets is important both in practice and in research, little attention has been devoted to the internal mechanism through which export affects innovation. Design/methodology/approach Using a hand-collected data set of human capital on the overseas experiences of managers and educational levels of employees as the basis, this study utilizes Chinese A-share listed firms from 2006 to 2015 to test the research questions through regression analyses. Findings First, export significantly enhances firm innovation. Second, different types of human capital exhibit different moderating and mediating effects. Specifically, returnee managers play positive moderating and mediating roles on the relationship between export and innovation, whereas highly educated employees exhibit negative moderating effects and no mediating effect. Third, to address potential endogeneity, the authors construct novel instrumental variables of export and human capital and use the two-stage least-squares method to identify causality. Originality/value This study provides direct policy implications by showing the roles of export and human capital in innovation, thereby guiding the management practices of firms and talent policies of governments.