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Old is Gold? The Effects of Employee Age on Innovation and the Moderating Effects of Employment Turnover

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  • Schubert , Torben

    (Fraunhofer Institute for Systems and Innovation Research (ISI) And CIRCLE, Lund University, Sweden)

  • Andersson , Martin

    (CIRCLE, Lund University, Sweden and Blekinge Institute of Technology)

Abstract

There is consistent evidence in the literature that average employee age is negatively related to firm-level innovativeness. This observation has been explained by older employees working with outdated technological knowledge and being characterized by reduced cognitive flexibility. We argue that firms can mitigate this effect through employee turnover. In particular turnover of R&D workers is deemed a vehicle for transfer of external knowledge to the firm, which can compensate for lower cognitive flexibility and up-to-date knowledge among older workers. We use a matched employer-employee dataset based on three consecutive CIS surveys for Sweden to test our predictions. Our results suggest a) that overall employee age impacts negatively on product innovation activities (both in terms of propensity and success), b) that the effect of em-ployee staying rate (measured by the share of employees that remain in the firm from one year to the next) on innovation follows an inverted U-shape implying an ‘optimal’ level of employment turnover, and c) that this ‘optimal’ value is lower for firms with older employees. The latter suggests that firms with older employees can at least partially compensate an aged workforce by increased employment turnover.

Suggested Citation

  • Schubert , Torben & Andersson , Martin, 2013. "Old is Gold? The Effects of Employee Age on Innovation and the Moderating Effects of Employment Turnover," Papers in Innovation Studies 2013/29, Lund University, CIRCLE - Centre for Innovation Research.
  • Handle: RePEc:hhs:lucirc:2013_029
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    2. Dabić, Marina & Stojčić, Nebojša & Simić, Marijana & Potocan, Vojko & Slavković, Marko & Nedelko, Zlatko, 2021. "Intellectual agility and innovation in micro and small businesses: The mediating role of entrepreneurial leadership," Journal of Business Research, Elsevier, vol. 123(C), pages 683-695.
    3. Jianrong Fan & Zhibin Huang & Jianwei Cao & Yaqi Wu, 2023. "Factors Affecting Employment Stability of Labor Immigration: Implications for Sustainable Development," Sustainability, MDPI, vol. 15(2), pages 1-16, January.
    4. Andersson, Martin & Kusetogullari, Anna & Wernberg, Joakim, 2021. "Software development and innovation: Exploring the software shift in innovation in Swedish firms," Technological Forecasting and Social Change, Elsevier, vol. 167(C).
    5. Alessandra Venturini & Claudio Fassio & Sona Kalantaryan, 2015. "Human Resources and Innovation: Total Factor Productivity and Foreign Human Capital," Discussion Papers 29, Central European Labour Studies Institute (CELSI).
    6. Martijn J. Smit, 2017. "Innovation through new blood," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 58(3), pages 543-578, May.
    7. Claudio Fassio & Sona Kalantaryan & Alessandra Venturini, 2020. "Foreign Human Capital and Total Factor Productivity: A Sectoral Approach," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 66(3), pages 613-646, September.
    8. Grillitsch, Markus & Schubert, Torben & Srholec, Martin, 2019. "Knowledge base combinations and firm growth," Research Policy, Elsevier, vol. 48(1), pages 234-247.
    9. Yanfang Jin & Shun-Chi Yu, 2022. "The Moderating Effect of Cross-Cultural Psychological Adaptation on Knowledge Hiding and Employee Innovation Performance: Evidence from Multinational Corporations," Sustainability, MDPI, vol. 14(24), pages 1-24, December.
    10. Grillitsch, Markus & Schubert, Torben & Srholec, Martin, 2016. "Knowledge diversity and firm growth: Searching for a missing link," Papers in Innovation Studies 2016/13, Lund University, CIRCLE - Centre for Innovation Research.

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    More about this item

    Keywords

    ageing; employee age; innovation; firm performance; R&D; human capita;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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