Chapter 9: SME Productivity in Greece: The Role of Human Capital, ICT Adoption, and Innovation

The main purpose of this chapter is to explore whether and how the productivity of SMEs is affected by qualified human capital, digital capabilities, and innovation activities. In doing so, we use a rich data survey of 3,500 Greek SMEs in the year 2012 and we perform conditional quantile regression analysis. The main findings of this study suggest that although human capital knowledge, ICT infrastructure, and organizational innovation are significantly affecting productivity at the mean of the distribution, the effects are highly differentiated in the quantiles. Thus, qualified human capital facilitates substantially the productivity of SMEs only in the middle and the higher quantiles of the productivity distribution. In addition, SMEs in some high and low quantiles seem to increase their productivity when they participate in R&D collaborations. Furthermore, a higher degree of ICT infrastructure and organizational innovation favors the labor productivity of SMEs in the low and middle quantiles. On the contrary, the internet usage by the employees of SMEs at the lowest quantile is harmful for their productivity. SMEs should adopt the most appropriate policies to increase productivity and enhance performance.