Human capital investment and innovation success in the telecoms sector in South Africa

Abstract

Innovation is one of the core and key characteristics of entrepreneurship, which stimulates operational and financial success of a firm. Innovation is ambidextrous in nature, characterised by exploration and exploitation. This report is concerned with exploitative innovation, which is characterised by new; products, services, and processes. This Research Report investigates how human capital investments (years of schooling and years of work experience of telecoms firms’ senior managers and executives) relate to innovation performance. This paper uses the human capital theory and the resource base theory to understand the perceived impact of human capital investments on performance and also its perceived moderation effect on the nexus between innovation and performance. Research findings from 81 senior management and executives of four major telecoms firms in South Africa indicate that innovation has a perceived direct impact on the perceived success of the firm. However, a counterintuitive relationship of human capital investments with performance is observed. Furthermore, human capital investments have a counterintuitive moderating effect on the nexus between innovation and performance. Therefore, this research report discusses human capital variable configurations that are more likely to have a perceived impact on a telecoms firm performance, and human capital variable configuration that are likely to have a moderating effect on the nexus between innovation and performance.