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

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Author Info

  • dekker, R

    ()
    (TU Delft, Technology, Policy and Management, Innovation Systems
    Tilburg University, ReflecT)

  • Kleinknecht, A.H.

    ()
    (TU Delft, Technology, Policy and Management, Innovation Systems)

  • Zhou, H

    (Erasmus University Rotterdam, Erasmus School of Economics, CASBEC Classification_JEL: J5; M5; O15; O31)

Abstract

Firms with high shares of workers on fixed-term contracts have significantly 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.

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Bibliographic Info

Paper provided by Delft University of Technology, Faculty of Technology, Policy and Management in its series Economics and Management of Innovation Working Papers with number 2010-1.

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Date of creation: 12 Apr 2010
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Handle: RePEc:dgr:tudemi:20101

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Related research

Keywords: Innovation performance; new product sales; numerical flexibility; functional flexibility; SMEs; OSA longitudinal data;

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References

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  1. Lorenz, Edward, 1999. "Trust, Contract and Economic Cooperation," Cambridge Journal of Economics, Oxford University Press, vol. 23(3), pages 301-15, May.
  2. 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.
  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. 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.
  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. Harry J. Holzer, 1987. "Hiring Procedures in the Firm: Their Economic Determinants and Outcomes," NBER Working Papers 2185, National Bureau of Economic Research, Inc.
  7. 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.
  8. Hall, Peter A. & Soskice, David (ed.), 2001. "Varieties of Capitalism: The Institutional Foundations of Comparative Advantage," OUP Catalogue, Oxford University Press, number 9780199247752.
  9. 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.
  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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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. Grassi, Emanuele & Di Cintio, Marco, 2012. "Uncertainty, flexible labour relations and R&D expenditure," MPRA Paper 37646, University Library of Munich, Germany.
  3. 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.
  4. 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.
  5. 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.
  6. 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.
  7. Eva Wachsen & Blind, K., 2011. "WP 115 - More flexibility for more innovation? Evidence from the Netherlands," AIAS Working Papers wp115, AIAS, Amsterdam Institute for Advanced Labour Studies.

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