Measuring the impact of innovative human capital on small firms' propensity to innovate

•Our new Innovative Human Capital concept encapsulates four elements: education, training, willingness to change in the workplace and job satisfaction.•The study estimates the effect of Innovative Human Capital on firm-level innovation.•An augmented innovation production function is employed to estimate the four hypotheses for small and larger-sized firms.•Results show the novel and holistic Innovative Human Capital is valuable for small firms’ innovation.•Innovative Human Capital is a key concept to consider when creating policy programmes in support of innovation.