Innovation, Organizational Learning and Job Creation

Product innovation is crucial for the economic performance of the whole economy as well as for the survival and growth firms. Innovation may be seen as a process of knowledge creation and the speed and direction of knowledge creation reflects the organizational set-up of the firm as well as investments in R&D and training. Establishing "a learning organization" facilitating horizontal interaction and communication inside and across the borders of the firm is a major factor promoting knowledge creation in the context of a learning economy. On the basis of a unique data set covering 2000 Danish private firms it is demonstrated that firms combining several of the organizational traits of the learning organization are much more prone to introduce new products than the others. It is also demonstrated that firms that introduce new products create more jobs than those that do not do so. These results emerge from a panel of 1,544 firms. As more sectors become exposed to the need to engage in incremental product and service innovation the economic potential of diffusing good practices in terms of organization and participation is growing and needs to be reflected in firm strategies and public policies aiming at promoting innovation and knowledge creation.