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Work flexibility and firm growth: evidence from LEED data on the Emilia-Romagna region
[Industrial policy and the future of manufacturing]

Author

Listed:
  • Alessandro Arrighetti
  • Luca Cattani
  • Fabio Landini
  • Andrea Lasagni

Abstract

In the last decades, work flexibility emerged as a key requirement firms must meet to face volatile markets and highly differentiated product demand. This article compares two alternative approaches to strengthen work flexibility: internal flexibility, that is, practices that focus on the employees’ ability to perform a variety of highly qualified tasks in a context of stable employment relationships; and external flexibility, that is, practices that align employment and labor costs to demand fluctuations using a buffer of nonstandard employees involved in routine tasks. We empirically verify whether both practices are able to boost sales growth using a linked employer-employee panel of manufacturing firms from the Emilia-Romagna region (Italy). While internal flexibility positively affects firm growth, external flexibility is at best not significant, and in some empirical specifications, it appears to hamper firm growth. Such a negative effect, however, decreases when we limit the analysis to industries with high demand volatility and cost-based competition. The related managerial and policy implications are discussed.

Suggested Citation

  • Alessandro Arrighetti & Luca Cattani & Fabio Landini & Andrea Lasagni, 2021. "Work flexibility and firm growth: evidence from LEED data on the Emilia-Romagna region [Industrial policy and the future of manufacturing]," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 30(6), pages 1516-1538.
  • Handle: RePEc:oup:indcch:v:30:y:2021:i:6:p:1516-1538.
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    File URL: http://hdl.handle.net/10.1093/icc/dtab028
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    Cited by:

    1. Landini, Fabio & Rinaldi, Riccardo, 2024. ""Bad Jobs" in "Good Industries": The Precarious Employment of Migrant Workers in the Manufacturing Sector of the Emilia-Romagna Region," GLO Discussion Paper Series 1409, Global Labor Organization (GLO).
    2. Pollio, Chiara & Landini, Fabio & Prodi, Elena & Arrighetti, Alessandro, 2023. "Does Temporary Employment undermine the Quality of Permanent Jobs?," GLO Discussion Paper Series 1273, Global Labor Organization (GLO).

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