Should We Expect Greater Innovation in the Future?

Will we see higher levels of innovation and skill development in the future? When entrepreneurship creates new products, it forces human capital upward as companies adapt this technology to create competitive advantages. Today's employment market is filling vacancies quickly and may soon begin to innovate again to find greater competitive strengths.

Spurts of technological advancement are followed by greater demands for market skills that raise human capital formation (Gomes, 2011). As companies adapt to new technology, they will seek to hire and train employees to use this technology. Employment expectation will adjust education and schooling to meet new job needs.

As the labor market moves closer to maximum employment capacity the cost of wages rises and pushes companies to adjust their strategies to focus on new competitive strengths. Technological advancement and integration is one approach that raises productivity and profit margins. The new demands will leave a gap in the employment market that takes time to fill.

The process of entrepreneurship, implementation, and human capital adjustments is a cyclical process where improvements in human capital can lead to greater adaptation. As businesses improve their competitiveness and hire additional skilled employees to fill vacant positions, the market becomes a draw for investment.

The development of society requires thinkers to create new ideas and spread those ideas to others where mass adaptation takes place. Today’s business world is more accustomed to innovation than at any other time in the past and will realign its educational and employment practices to encourage greater innovation. The speed of information transference will make innovation mass consumption faster thereby creating shorter product development times. Society will be in a constant process of change as innovation and skill development grow together.

Gomez, M. (2011). Stages of Economic Development in an Innovation-Education Growth Model. Studies in Nonlinear Dynamics and Econometrics, 5 (4).

The Economic Value of Human Capital

Understanding how human capital is utilized in society and how that human capital is measured is important for understanding economic underpinnings.  A study by Olimpia Negu delves into comparing human capital attainment throughout 28 OECD countries and the market benefits of that capital (2012). This measurement helps to show which countries have the highest human capital development. It may also start to highlight where economic growth is most receptive.

Before analysis it is important to understand what human capital actually is. Human capital is complex and hosts concepts such as biological capital, educational capital, social skills, and health capital (Neagu, 2010). The total human being and their ability to be productive in the environment entail their ability to be productive.  Laroche et. al. (1999) indicates that human capital has some generalizations:

-Non-tradable good embodied in humans.

-Individuals are subject to human capital decisions made by parents, society, and government. Individuals who make their own choices internalize those choices.

-Human capital is qualitative and quantitative.

-Human capital can be used for multiple purposes and is transferable among businesses.

Because human capital can be complex and difficult to measure across nations most researchers use time in education. There is a basic assumption that education raises the ability of people to compete and be productive on the market. The more productive people in a nation the greater the national output.

Collective productivity turns into the Gross Domestic Product (GDP) of the nation and can be broken down into the GDP of the individual. The cost of education is important in determining the effective value of that human capital. Judson (2002) expanded on previous calculations to create measurements of human capital per worker (h) based upon cost of education:

 Human capital can be studied and used as an imperfect measurement across nations. These measurements are important because they can impact whether or not a society even has the potential to grow.  The authors found that the human capital value of 28 OECD countries between 1999-2008 were led by the U.S., Australia, and Austria and trailed by Mexico, Czech Republic and Hungary. The market leading nations had economic value of their population's skills and abilities. 

Laroche, M., et. al. (1999). On the concept and dimensions of human capital in a knowledge-based economy context. Canadian Public Policy - Analyse de Politiques, 25(1)

Judson, R. (2002) Measuring human capital like physical capital. Bulletin of Economic Research 54 (3).

Neagu, O. (2010). Capitalul uman _i dezvoltarea economic_, Cluj Napoca: Editura Risoprint.

Neagu, O. (2012). The market value of human capital: an empirical analysis. Economic Science Series, 21 (2).

Research has yet to define the Spark of Life in the Gifted

Gifted students may have the intelligence but they also need the spark of life to make them genius masters. Joan Freeman discusses her experiences and research on the subject in her publication A Quality of Giftedness. She delves into the hard science but also discusses that science misses something very important because each gifted person finds their own path to make waves in the world; this is not easily calculated. That quality does not change as people get older even if they must focus on making money and supporting families. 

Her recognition of gifted youth is often based on their novelty to answering questions and problems. Teachers are annoyed and attempt to cram these children into a pre-defined rule set that is often more beneficial for the teacher than the student. Sit down, be quiet, do this work, read this, don’t ask annoying questions may be some of the feedback they receive throughout their educational careers. It is one of the reasons why such gifted students often drop out of school despite their abilities. 

The trait that seems to have the most universality is their novelty in solving problems that show a creativity and ability to “think outside the box” on issues. While most students are giving the standard simple answers the gifted child says the most ludicrous statements. Most of the time, these answers are simply given an odd look and discounted as bazaar. Few may look deeper to ask the question, “What do you mean?”

That is where ability comes into play. Some will begin to talk in painstaking detail connecting tid bit of information to tid bit of information to create long strings of logic, others will discuss the context of the information, while others will show you what they mean. Advanced intelligence is based in their ability to explain and find ways of coming to new conclusions that when given a chance to discuss end up being more in depth and logical than the standard answer.  The bazaar is then practical.

Despite this intelligence there is something different between the ones who make it and the ones who don’t. That is the Spark of Life! The ones who have it continually engage in a process of self-development day in and day out. They practice over and over because the action is worth more than the outcome. They have an insatiable urge to simply be, overcome, and master. Their inner power is like a nuclear reactor that continues to smash atoms until they reach their destination. 

For many this doesn’t change when they become adults. Until their last breath they will continue to seek information, create something new, and engage in their pursuits. It is a powerhouse of desire. The type of giftedness will determine the abilities they show such as empathy, arts, science, etc. The author contends a few of the children grow up to be system busters that can be identified through their old souls and abilities that seem to align with the angels. Research has yet to master their unique paths and how the rules change for each gifted individual.

Freeman, J. (2012). A quality of giftedness. Gifted & Talented International, 27 (2)

Using Business Incubators for Economic Development

The United States, Europe and Asia are trying to spark their economies by encouraging national development. A paper by Al-Mubaraki and Busler (2013) explores the concept of how business incubation supports diverse economies, commercialization of new technologies, improves the job market, and creates local wealth. They further discuss how local decision-makers can foster new economic activity in their regions to develop future sustainable wealth. 

Business incubation is part economic and part social. The goal is to encourage start-up businesses to find economic and social footing among like minded individuals to leave them free standing and viable. It is a seeding process that eventually leads to higher levels of local innovation and growth oriented companies that further the economic and social needs of the area. It is through local development that national interests can be secured.

Economic development is a process of wealth generation that takes into consideration the human, capital, financial, physical resources, and natural resources of an area. It uses these resources in combination to spur economic buzz that manifests into new products, services, and jobs. The secondary benefits can include improved social living, better communities, and viable government. As areas become financial secure they can impact the economic vines around them.

Business incubation centers for sponsoring organizations. Helping to develop small businesses that produce new products and services for their sponsor can create higher levels of corporate growth. It provides the freedom and resources for small companies to develop ideas but also allows larger companies to turn those ideas into mass products and services. To do this well will require the buy in of local stakeholders including local parties, government and corporations.  

The author contends that to develop these economic incubation hubs it is necessary to have power to create action. This power can come through money, force, persuasion or information. Secondly it is beneficial to have theory which understands the cause and effect of economic events while simplifying reality for shared understanding. Third it is beneficial to integrate theory into human understanding and perception in order to encourage people to see those things beyond their narrow perception. Fourth, it is required that people have mediation which pushes them to act upon the environment through specific beneficial behaviors. 

Another way of viewing these concepts is to say that there must be force to act through power, a clear path of cause and effect, a new awareness of community members, and finally beneficial action. The economic and social sides work together to create economic synergy. As environment forces encourage people to seek change, people look to their leaders who can propose solutions, create new understandings, and motivate others to act in their best interest along new lines of thinking. During a time of crisis they are most open to solutions. 

How incubators lead to further economic growth can be seen in its three stages of incubators stage, post incubators stage, and extension stage. In the incubators stage start-up concepts are supported by the incubator and this helps to create new jobs. In the post incubators stage new companies move into self-reliance and grow the job market. In the extension stage the graduated companies use their business knowledge, entrepreneurship, and job growth to contribute to local economic development.

Countries have found that the development and use of incubators encourages economic growth. With over 7,000 incubators in the world China leads the world in its implementation. This may be associated with China’s higher level of growth and new businesses that enter the market every year. As a nation seeking to expand and grow the U.S. should also consider their benefit in economic suppressed areas. The report doesn’t indicate this concept but one must build new economic and social platforms based on the foundations of the past. Where manufacturing of equipment was once plentiful the manufacturing of new technology products becomes possible. Reaching too far beyond the culture of a location may limit the successful social adaptation of people.

We could further postulate that urban cores are natural places to develop business incubation programs. Buildings are plentiful and city centers naturally draw the bohemian crowd of artists and the creative class. The nation appears to be suffering from a declining urban core and incubators may be one possible solution to regenerating these core areas. We can wonder what the 5 to 10 year impact would be on a nation that fostered such incubators throughout major cities and offered help in connecting small to large and local to international investors to the ideas and businesses they incubators produce. Would there be synergistic growth in national revenue?

Al-Mubaraki, H. and Busler, M. (2013). Business incubation as an economic development strategy: a literature review. International Journal of Management, 2 (30).

Human Capital: The development of success

Human Capital Theory postulates that the more biological, psychological, creative, knowledge, social, and work skills a person develops the more successfully they are going to be in life.  The theory is often broken into intangible capital that focuses on things like social abilities and tangible capital that focuses more closely on skills and education. In many ways educational attainment and skill development are used to measure human capital. Generally, the human capital a person retains, or can develop, the more beneficial they become to the organization and society. 

Human capital creates an incentive for developing employees to their highest possible skill level. By raising the human capital of an organization it is believed that the organization will become more efficient, creative and productive. The time, effort, and costs are some of the detractors associated with the developing employees. Yet those organizations that do not engage in training generally have stagnant workers stuck in low skilled jobs and in turn maintain lower profits. 

Assuming that each organizations is a process that takes inputs and transforms them into greater outputs it is possible to see how low skilled labor minimizes the opportunities to make profits out of the process. For example, a plant that simply nails a few boards together to create a box, but must purchase pre-cut boards, will make less money per transaction than one that can process the entire chain of development from uncut board to box. When employee skill levels are low the organization must focus on automation and volume to develop enough products to raise profit margins. 

In highly competitive markets it is necessary to move beyond basic rudimentary skills into highly developed reasoning and decision-making abilities. Specialization often occurs as people seek to maximize a smaller set of skills for higher productivity. At the executive and management level a greater level of general skills are needed to complete a variety of reasoning tasks on a complex global scale. Education becomes a medium to this growth.

The very education a person chooses to raise their human capital is based in expectations, perceptions and beliefs (Van der Merwe, 2009). Such people who choose to pursue a high level of education do so because of an expected economic, personal, and social return. Intellectual markets seek to recruit from that education and experience to maximize their market opportunities. 

On a macro level human capital, education, and skill obtainment have something to do with the overall productivity of a nation. When regions, nations, and cities retain more skilled employees they are able to foster more productivity and earn higher profits than areas where low skills abound. According to research by Neagu (2012) on 22 countries it found that nations with the highest level of productivity also had the highest level of human capital. 

Whether one is discussing the individual level, the organization level, or the national level the development of human capital is important for economic success. Where productivity and creativity are high so are the opportunities for financial success. In today’s world, many emerging countries can compete on low skilled labor and therefore nations must adapt and develop to retain their financial strength. Through organizational training, formal education, and experimentation people develop higher sets of skills that they can use to enhance their own earning power and sell on the market for larger economic improvement. 

Neagu, O. (2012). Labour productivity and human capital in the EU countries: an empirical analysis. Annals of the University of Oradea, Economic Science Series, 21 (1). 

Van der Merwe, A. (2010). Does human capital theory account for individual higher education choice? International Business & Economics Research Journal, 9 (6).