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Flexible Labor and Innovation Performance: Evidence from Longitudinal Firm-Level Data

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  • Zhou, H.
  • Dekker, R.
  • Kleinknecht, A.

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 inno¬va¬tive new products (“first on the market”). High functional flexibility in “insider-outsider” la¬bor markets enhances a firm’s new product sales, as do training efforts and highly edu¬ca¬¬ted personnel. We find weak evidence that larger and older firms have higher new pro¬duct sales than do younger and smaller firms. Our findings should be food for thought to eco-nomists making unqualified pleas for the deregulation of labor markets.

Suggested Citation

  • Zhou, H. & Dekker, R. & Kleinknecht, A., 2010. "Flexible Labor and Innovation Performance: Evidence from Longitudinal Firm-Level Data," ERIM Report Series Research in Management ERS-2010-007-ORG, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
    • Handle: RePEc:ems:eureri:18037
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    References listed on IDEAS

    as
    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. 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.
    5. Alfred Kleinknecht & Pierre Mohnen (ed.), 2002. "Innovation and Firm Performance," Palgrave Macmillan Books, Palgrave Macmillan, number 978-0-230-59588-0, December.
    6. 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.
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    More about this item

    Keywords

    J5; M5; O15; O31; OSA longitudinal dataset; SMEs; innovation performance; new product sales; numerical flexibility;
    All these keywords.

    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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