Human capital and information technology capital investments for firm innovation: Curvilinear explanations

Abstract

We investigate the relationship between a firm's investments in knowledge-related assets and innovation. We propose curvilinear (inverted-U shaped) effects of human capital investments and IT capital investments on firm innovation respectively. Based on the analysis of 349 German firms across industries, corroborating support for the proposed relationships is presented. We contribute to the existing work on the resource-based view of the firm (RBV) by identifying and testing the possible downsides associated with the excessive accumulation of strategic resources. © 2012 Springer-Verlag Berlin Heidelberg.