Abstract:

Our understanding of what drives national prosperity has evolved over time. Natural resources, population growth, industrialization, geography, climate, and military might have all played a role in the past. We also know that the relative importance of these drivers has shifted over time, and that in recent decades, more importance has been given to the coherence and quality of policies and the development of supporting institutions. Nevertheless, one of the most important modern engines of productivity and growth has been the innovation excellence of a country; that is, its industries, researchers, developers, creative thinkers, enlightened politicians, managers, and clusters. This paper discusses the role of innovation in promoting economic and social development. In particular, it features the human capital as a critical tool for raising the extent to which nations have succeeded in developing a climate that will nourish the potential for innovation. Considering that processes don’t do work, but people do, our research highlights the fact that employee involvement can be encouraged, by creating positive work environments in which the cultural and demographic diversity of members helps to create competitive advantage. Recognizing the fact that an unsupportive culture and climate is a critical barrier to achieving breakthrough levels of innovation, we set out to identify the key components of an organizational culture that supports innovation, highlight the human capital management practices that foster an innovative environment and better understand the roles that senior executives can play in enabling innovation from a people perspective.