Determinants of young firms' innovative performance: Empirical evidence from Europe

This paper explores the effect of diverse firm resources and competences such as founders' human capital, workforce human capital and acquisition of knowledge from external sources on the innovation performance of young firms. The empirical analysis is based on data from a rich European survey that examined small firms between three and ten years of age across a wide industrial spectrum of knowledge-intensive services and manufacturing sectors in ten countries. The study provides evidence that aspects of both internal factors, especially those encapsulated in the human capital of founders such as prior exposure to R&D, team functional diversity and educational background, and external firm characteristics, such as technology collaborations and networking with universities are important in explaining young firms' innovative activity.