The Moderating Effects of Human Capital and Cultural Diversity on the Link between Social Capital and Innovation Performance: A Cross-Country Study

Abstract

This study contributes to current knowledge regarding the role of social capital, constituted by generalized trust, institutional trust, associational activity and norms of civic, towards country‟s innovation level as well as the moderating roles of nation-specific factors of human capital and cultural heterogeneity on the stated relationship, while examining the case of 51 countries around the world. Many researches have confirmed the positive contributions of social capital, human capital and cultural diversity to the development of national innovativeness. However, very few of them has ever assessed the interactions between these variables in the presence of the others in explaining country‟s innovation capability. By the aim of explaining the dynamics of cross-country‟s divergence in innovation level, the study made an effort to fill in this research gap by using countries‟ human capital and cultural heterogeneity as moderators for social capital in its relationship with innovation. The results highlight the positive impact of interpersonal trust and norms of civic behaviour on country‟s innovativeness though associational activity was confirmed with negative impact. Furthermore, human capital and cultural heterogeneity were found to weaken the link between interpersonal trust and innovation, whereas reduce the adverse effect of community involvement on national innovation performance. Keywords— Innovation, social capital, human capital, cultural diversity, trust, norms, community involvement.