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Flexible labor and innovation performance: evidence from longitudinal firm-level data

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  • Haibo Zhou
  • Ronald Dekker
  • Alfred Kleinknecht

Abstract

Firms with high shares of workers on fixed-term contracts tend to have higher sales of imitative new products but perform significantly worse on sales of innovative new products ("first on the market"). High functional flexibility in "insider--outsider" labor markets enhances a firm's new product sales, as do training efforts and highly educated personnel. We find weak evidence that larger and older firms have higher new product sales than do younger and smaller firms. Our findings should be food for thought to economists making unqualified pleas for the deregulation of labor markets. Copyright 2011 The Author 2011. Published by Oxford University Press on behalf of Associazione ICC. All rights reserved., Oxford University Press.

Suggested Citation

  • Haibo Zhou & Ronald Dekker & Alfred Kleinknecht, 2011. "Flexible labor and innovation performance: evidence from longitudinal firm-level data," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 20(3), pages 941-968, June.
    • Handle: RePEc:oup:indcch:v:20:y:2011:i:3:p:941-968
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    References listed on IDEAS

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    1. G. M.P. Swann, 2009. "The Economics of Innovation," Books, Edward Elgar Publishing, number 13211.
    2. Spyros Arvanitis, 2005. "Modes of labor flexibility at firm level: Are there any implications for performance and innovation? Evidence for the Swiss economy," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 14(6), pages 993-1016, December.
    3. Michie, Jonathan & Sheehan, Maura, 1999. "HRM Practices, R&D Expenditure and Innovative Investment: Evidence from the UK's 1990 Workplace Industrial Relations Survey (WIRS)," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 8(2), pages 211-234, June.
    4. Casey Ichniowski & Kathryn Shaw, 1995. "Old Dogs and New Tricks: Determinants of the Adoption of Productivity-Enhancing Work Practices," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 26(1995 Micr), pages 1-65.
    5. Akkermans, Dirk & Castaldi, Carolina & Los, Bart, 2009. "Do 'liberal market economies' really innovate more radically than 'coordinated market economies'?: Hall and Soskice reconsidered," Research Policy, Elsevier, vol. 38(1), pages 181-191, February.
    6. Alfred Kleinknecht & Pierre Mohnen (ed.), 2002. "Innovation and Firm Performance," Palgrave Macmillan Books, Palgrave Macmillan, number 978-0-230-59588-0, December.
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    More about this item

    JEL classification:

    • M - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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