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Workers’ replacements and firms’ innovation dynamics: New evidence from Italian matched longitudinal data

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  • Grinza, Elena
  • Quatraro, Francesco

Abstract

In this paper, we explore the impact of a firm's workers’ replacements on innovation performance by using rich matched employer–employee panel data for the Veneto region of Italy. We take the well-known resource-based theory of the firm as our departure point, and develop a set of hypotheses which we test empirically with negative binomial regressions. We find that workers’ replacements significantly dampen innovation performance, coherently with the idea that they generate losses in the tacit knowledge base of the firm. We also find that workers’ replacements are especially detrimental to large and young firms, possibly because large companies benefit comparatively less from ‘diaspora’ effects and because innovative capabilities in young firms are mostly dependent on specific human capital. Finally, our results show that firms’ location in industrial districts significantly mitigates the negative impact of workers’ replacements, and that a similar picture emerges when firms are more exposed to knowledge spillovers, particularly of related knowledge.

Suggested Citation

  • Grinza, Elena & Quatraro, Francesco, 2019. "Workers’ replacements and firms’ innovation dynamics: New evidence from Italian matched longitudinal data," Research Policy, Elsevier, vol. 48(9), pages 1-1.
  • Handle: RePEc:eee:respol:v:48:y:2019:i:9:40
    DOI: 10.1016/j.respol.2019.05.013
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    2. Consoli, Davide & Fusillo, Fabrizio & Orsatti, Gianluca & Quatraro, Francesco, 2020. "Skill Endowment, Routinisation and Digital Technologies: Evidence from U.S. Metropolitan Areas," Department of Economics and Statistics Cognetti de Martiis. Working Papers 202025, University of Turin.
    3. Martínez-Sánchez, Angel & Vicente-Oliva, Silvia & Pérez-Pérez, Manuela, 2020. "The relationship between R&D, the absorptive capacity of knowledge, human resource flexibility and innovation: Mediator effects on industrial firms," Journal of Business Research, Elsevier, vol. 118(C), pages 431-440.

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    More about this item

    Keywords

    Workers’ replacements; Excess worker turnover; Innovation performance; Tacit knowledge; Knowledge spillovers; Employer–employee matched longitudinal data;
    All these keywords.

    JEL classification:

    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General

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