Human Capital between Generalists and Specialists: How Does It Impact Innovation?

Abstract

While human capital theory and upper echelon theory predicts that a firm should innovate better when its CEO possess more human capital, this relationship has been difficult to measure empirically. As a result, little is known about the part that individual CEO plays in explaining innovation performance. In this paper, using a unique dataset on S&P 500 CEO human capital between 1996 and 2003, I examine whether the CEO specific human capital having a critical firm expertise or science expertise affects firm innovation. This paper aims to empirically explore the effects of science specific human capital and firm specific human capital on innovation efficiency. My findings support the idea that CEOs that gather more specific human capital promote better innovation for the firm. I also find that science-specialists CEOs promote innovation performance than firm-specialists CEOs and generalists CEO. My analyses indicate that both types of human capital do matter in the context of innovation. I offer an alternative view of how intangible special human capital promotes firm outcomes by comparative advantages.