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Innovation and employment in manufacturing and service firms in Ghana

Author

Listed:
  • Priscilla Twumasi Baffour

    (University of Ghana)

  • F. Ebo Turkson

    (University of Ghana)

  • Agyapomaa Gyeke-Dako

    (University of Ghana)

  • Abena D. Oduro

    (University of Ghana)

  • Emmanuel Nii Abbey

    (University of Ghana)

Abstract

While the importance of innovation as a primary source of economic growth has never been in dispute, its impact on employment has remained indeterminate. On one hand, the pessimists indicate that firm innovation destroys jobs because of the immediate indirect labour-saving nature of the effect of innovation, while the optimists argue that there are several compensation mechanisms that are known to counterbalance the initial effect of innovation and render the final effect indeterminate. Using data on a panel of 421 firms in Ghana, the paper investigates the relationship between innovation introduced at the firm level and employment. Relying on the panel fixed effects and Hausman-Taylor estimation techniques, this study finds a robust statistically significant positive impact of product innovation on employment but not for process innovation. In terms of policy relevance, this finding reemphasizes the need for policy makers in Ghana to intensity efforts in promoting technology diffusion particularly through FDI. This study thus contributes to the literature on innovation in Africa by providing evidence on why technological innovation in the form of product innovation can be a panacea to alleviating employment challenges in Ghana.

Suggested Citation

  • Priscilla Twumasi Baffour & F. Ebo Turkson & Agyapomaa Gyeke-Dako & Abena D. Oduro & Emmanuel Nii Abbey, 2020. "Innovation and employment in manufacturing and service firms in Ghana," Small Business Economics, Springer, vol. 54(4), pages 1153-1164, April.
  • Handle: RePEc:kap:sbusec:v:54:y:2020:i:4:d:10.1007_s11187-018-0120-7
    DOI: 10.1007/s11187-018-0120-7
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    References listed on IDEAS

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    Cited by:

    1. Hugo Castro-Silva & Francisco Lima, 2023. "The struggle of small firms to retain high-skill workers: job duration and the importance of knowledge intensity," Small Business Economics, Springer, vol. 60(2), pages 537-572, February.
    2. Ayhan, Fatih & Elal, Onuray, 2023. "The IMPACTS of technological change on employment: Evidence from OECD countries with panel data analysis," Technological Forecasting and Social Change, Elsevier, vol. 190(C).
    3. Rajeev K. Goel & Michael A. Nelson, 2022. "Employment effects of R&D and process innovation: evidence from small and medium-sized firms in emerging markets," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 12(1), pages 97-123, March.
    4. Durmuş Çagri Yildirim & Seda Yildirim & Seyfettin Erdogan & Tugba Kantarci, 2022. "Innovation—Unemployment Nexus: The case of EU countries," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 27(1), pages 1208-1219, January.

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    More about this item

    Keywords

    Process innovation; Product innovation; Employment; Manufacturing; Service; Ghana;
    All these keywords.

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

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