impact the innovation outcome, and in fact it has a negative sign in all the models (but significant only for innovation sales) while, on the other hand, the level of knowledge embedded in the top management seems to influence positively and significantly the innovation and R&D investment. A possible explanation of this result could be that managers’ education is not always closely linked with the most recent knowledge about technology and management practices. Bearing in mind the limitation of the proxies of human capital used in this analysis, because of the nature and limitations of the data, it can still be noted that the high rating of managers’ education and training influence positively and significantly the probability of product innovation. This result could be interpreted as the effect of tacit knowledge, considered a component of innovation that is at least as important as formalized knowledge. The accumulation of experience and firmspecific knowledge, established through learning by doing, and by extension, through training on the job, contributes to the development of absorption capacity in the firm and can be considered part of the firm’s human capital. Nevertheless, more specific data on firms’ human capital is required to ascertain the link between firms, human capital and innovation in Chile.

# **6.2 COLOMBIA**

# **Innovation inputs.**

Our analysis shows that firm size and the share of employees with secondary and tertiary education have a positive impact on innovative inputs (investment and R&D) in Colombian firms (see table A.4.3).

Size is indeed a common factor when analyzing innovation determinants and is confirmed by numerous studies. It is also interesting to see that the share of employees with tertiary education has a larger impact than the share of employees with secondary school education, and in particular the latter do not have a significant impact in determining the investment in R&D. This leads to the suggestion that the more research based the investments are, the higher is the demand for skilled personnel.

The sector to which a firm belongs has in some cases a significant influence on whether a firm has R&D activities or general innovation investment. Finally it is interesting to see that a geographical location in or around Bogotá has a negative impact on innovative activity. This finding is in our opinion worth further analysis in the future (as discussed in chapter 7).

# **Innovation outcomes**

The innovation outcomes have been modeled in table A.4.4 according to the different types of output, classified on the basis of data available from the survey: product, process and IPR innovation. The impact of explanatory variables is reported below.

**Firm characteristics.** Firm characteristics, such as size or the presence of a R&D department inside the firm, a proxy of the firm’s **absorption capacity** , are found to have a significant impact on innovation outcomes. Larger firms in Colombia and firms that have their own R&D department have a higher probability of successful innovation activity, in any of the different types of outcomes. From the computation of marginal effects (table A.4.6), the presence of a R&D department is thought to increase the

15