Hiring New Ideas: International Migration and Firm Innovation in New Zealand

Poor productivity performance has been identified as a significant issue for New Zealand, and innovation is seen as a key mechanism for improving productivity growth. Understanding the drivers of firm innovation therefore represents an important step towards improving New Zealand’s economic performance. In this paper, we combine firm-level innovation data with worker characteristics to examine links between innovation and the presence of new arrivals – both immigrants and returning New Zealanders – in the firm’s workforce. Across a range of measures we find positive relationships between firm-level innovation and the share of new arrivals. These relationships weaken once we account for variation in firm characteristics (firm size, industry, R&D expenditure) and other worker characteristics (including the share of new and/or high skilled workers). Within new arrivals, innovation outcomes are most strongly associated with high skilled workers, though magnitudes vary depending on whether workers are returning New Zealanders or immigrants. Firms with a higher share of high skilled recent migrants were more likely to report introducing new marketing methods, new goods and services, or goods and services new to New Zealand. Firms with a higher share of high skilled returning New Zealanders were more likely to report introducing new organisational and managerial practices, and (as with migrants) goods and services new to New Zealand.