Skills Gap, Innovation, and Firms Performance in Zambia.

Abstract

This study examines the interaction between employees‟ skill, innovation and firm‟s performance. A skilled labour force has a significant impact on the innovation, performance and long-term competitiveness of the firm. Due to a weak educational system coupled with limited training facilities, most Zambian firms still face challenges in acquiring the required skilled workforce. The World Bank Skills Survey Zambia 2016 is used for the empirical analysis on 350 small, medium, and large enterprises. A binomial logit model is used for the innovation model and OLS regression model for performance measurement. We employ sales growth as a measure of firm performance. The results show that the number of professional & skilled employees and trainings were important factors of innovation. Furthermore, we find that innovation and location have an impact on the firms‟ performance as measured by sales growth.