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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.

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Bibliographic Info

Article provided by Oxford University Press in its journal Industrial and Corporate Change.

Volume (Year): 20 (2011)
Issue (Month): 3 (June)
Pages: 941-968

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Handle: RePEc:oup:indcch:v:20:y:2011:i:3:p:941-968

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References

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  1. Harry J. Holzer, 1987. "Hiring Procedures in the Firm: Their Economic Determinants and Outcomes," NBER Working Papers 2185, National Bureau of Economic Research, Inc.
  2. Lorenz, Edward, 1999. "Trust, Contract and Economic Cooperation," Cambridge Journal of Economics, Oxford University Press, vol. 23(3), pages 301-15, May.
  3. Alison L. Booth & Marco Francesconi & Jeff Frank, 2002. "Temporary Jobs: Stepping Stones or Dead Ends?," LABORatorio R. Revelli Working Papers Series 8, LABORatorio R. Revelli, Centre for Employment Studies.
  4. Malcomson, J.M., 1997. "Contracts, hold-up and labor markets," Discussion Paper Series In Economics And Econometrics 9703, Economics Division, School of Social Sciences, University of Southampton.
  5. Giuseppe Nicoletti & Stefano Scarpetta, 2003. "Regulation, productivity and growth: OECD evidence," Economic Policy, CEPR & CES & MSH, vol. 18(36), pages 9-72, 04.
  6. Alfred Kleinknecht & Remco Oostendorp & Menno Pradhan & C. W. M. Naastepad, 2006. "Flexible Labour, Firm Performance and the Dutch Job Creation Miracle," International Review of Applied Economics, Taylor & Francis Journals, vol. 20(2), pages 171-187.
  7. Hall, Peter A. & Soskice, David (ed.), 2001. "Varieties of Capitalism: The Institutional Foundations of Comparative Advantage," OUP Catalogue, Oxford University Press, number 9780199247752.
  8. Keld Laursen & Nicolai J. Foss, 2003. "New human resource management practices, complementarities and the impact on innovation performance," Cambridge Journal of Economics, Oxford University Press, vol. 27(2), pages 243-263, March.
  9. Akkermans, Dirk & Castaldi, Carolina & Los, Bart, 2007. "Do ‘Liberal Market Economies’ Really Innovate More Radically than ‘Coordinated Market Economies’? Hall & Soskice Reconsidered," GGDC Research Memorandum GD-91, Groningen Growth and Development Centre, University of Groningen.
  10. Lewis M. Segal & Daniel G. Sullivan, 1995. "The temporary labor force," Economic Perspectives, Federal Reserve Bank of Chicago, issue Mar, pages 2-19.
  11. Alfred Kleinknecht & Kees Van Montfort & Erik Brouwer, 2002. "The Non-Trivial Choice between Innovation Indicators," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 11(2), pages 109-121.
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Citations

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Cited by:
  1. Nicolas Piluso & Gabriel Colletis, 2012. "Shareholder value and equilibrium rate of unemployment," Economics Bulletin, AccessEcon, vol. 32(4), pages 3233-3242.
  2. Marco Di Cintio & Emanuele Grassi, 2013. "Uncertainty, flexible labour relations and R&D expenditure," EERI Research Paper Series EERI RP 2013/13, Economics and Econometrics Research Institute (EERI), Brussels.
  3. Tor Eriksson & Zhihua Qin & Wenjing Wang, 2014. "Firm-level Innovation Activity, Employee Turnover and HRM Practices – Evidence from Chinese Firms," Economics Working Papers 2014-09, School of Economics and Management, University of Aarhus.
  4. Spyros Arvanitis & Tobias Stucki & Florian Seliger, 2013. "The Relative Importance of Human Resource Management Practices for a Firm’s Innovation Performance," KOF Working papers 13-341, KOF Swiss Economic Institute, ETH Zurich.
  5. Nicole Torka & Jan Kees Looise & Stefan Zagelmeyer, 2011. "Ordinary Atypical Workers, Participation within the Firm and Innovation: A Theoretical Endeavor and Empirical Outlook," management revue. Socio-economic Studies, Rainer Hampp Verlag, vol. 22(3), pages 221-239.
  6. William Addessi & Enrico Saltari & Riccardo Tilli, 2011. "R&D and Innovation Activities and the Use of External Numerical Flexibility," Working Papers 150, University of Rome La Sapienza, Department of Public Economics.
  7. Olivier N. Godart & Holger Görg & Aoife Hanley, 2014. "Trust-based Work-time and Product Improvements: Evidence from Firm Level Data," Kiel Working Papers 1913, Kiel Institute for the World Economy.
  8. Godart, Olivier & Görg, Holger & Hanley, Aoife, 2014. "Trust-Based Work-Time and Product Improvements: Evidence from Firm Level Data," IZA Discussion Papers 8097, Institute for the Study of Labor (IZA).
  9. Addessi, William & Saltari, Enrico & Tilli, Riccardo, 2014. "R&D, innovation activity, and the use of external numerical flexibility," Economic Modelling, Elsevier, vol. 36(C), pages 612-621.

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