Innovation among early stage entrepreneurs:

This study examines the effect of human capital on innovation among early stage entrepreneurs. The contribution of this study is to extend the existing literature in four directions. First, there are five different human capital indicators included in this study. These are Network, Education, Experience, Opportunity Based Entrepreneurship and Skills. Second, this study distinguishes between Product innovation and Process innovation. Third, the respondents are all early stage entrepreneurs. Finally, this study is focused on the countries from the European Union. The sample that is used is constructed from the Global Entrepreneurship Monitor in 2009. It contains data from 18 countries from the European Union. The results provide evidence that human capital is a determinant of innovation among early stage entrepreneurs. First, all the human capital indicators have a positive effect on product innovation, except skills required to start up a new business. Second, all the human capital indicators have a positive effect on process innovation, except opportunity based entrepreneurship. However, the results only show that educational attainment has a positive significant result at the 5% significance level on the probability of having an innovation. This result is obtained for both measures of innovation. Although all the other results are not significant at the 5% significance level, skills required to start a new business has a positive relation with process innovation at the 10% significance level. This positive relation also occurs when only the countries with more than 100 observations are included. These countries are Spain, United Kingdom, Germany and Latvia.