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Works Councils, Training Activities and Innovation: A Study of German Firms

  • Uwe Cantner

    ()

    (School of Economics and Business Administration, Friedrich-Schiller-University Jena)

  • Wolfgang Gerstlberger

    ()

    (University of Southern Denmark, Department of Marketing and Management)

  • Ipsita Roy

    ()

    (Graduate College "The Economics of Innovative Change" (DFG-GK-1411), Friedrich Schiller University Jena, Department of Economics)

Building on the notion of general and specific human capital proposed by Becker (1962), the paper highlights the importance of employee training practices undertaken in firms as an important tool for human resource and knowledge management and focuses on the role of works councils as a specific form of employee representation system therein. Using establishment data on various aspects of training practices and innovation activities in Germany, the paper examines the degree, type and extent to which establishments invest in employee training and finds significant differences for firms with and without works councils. Specifically, findings suggest that works councils are related more with the provision of generalized training rather than in firm-specific technical training of employees. In addition, the paper finds strong support for using works councils as an instrument for a firm's total training activities that correlate with innovation, and weak support when we consider only generalized training and innovation. Finally, no significant relation is found between training practices and radical innovativeness of firms after accounting for reverse causality.

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Paper provided by Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics in its series Jena Economic Research Papers with number 2014-006.

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Date of creation: 10 Mar 2014
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Handle: RePEc:jrp:jrpwrp:2014-006
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  1. Loewenstein, Mark A & Spletzer, James R, 1998. "Dividing the Costs and Returns to General Training," Journal of Labor Economics, University of Chicago Press, vol. 16(1), pages 142-71, January.
  2. Mourad Dakhli & Dirk De Clercq, 2004. "Human capital, social capital, and innovation: a multi-country study," Entrepreneurship & Regional Development, Taylor & Francis Journals, vol. 16(2), pages 107-128, March.
  3. Acemoglu, Daron & Pischke, Jörn-Steffen, 1996. "Why do Firms Train? Theory and Evidence," CEPR Discussion Papers 1460, C.E.P.R. Discussion Papers.
  4. Stefan Bauernschuster & Oliver Falck & Stephan Heblich, 2009. "Training and Innovation," Journal of Human Capital, University of Chicago Press, vol. 3(4), pages 323-353.
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  6. Michael Beckmann & Matthias Kräkel, 2011. "Internal Rent Seeking, Works Councils, and Optimal Establishment Size," Working papers 2011/14, Faculty of Business and Economics - University of Basel.
  7. Addison, John T & Schnabel, Claus & Wagner, Joachim, 1996. "German Works Councils, Profits, and Innovation," Kyklos, Wiley Blackwell, vol. 49(4), pages 555-82.
  8. Acemoglu, Daron, 1997. "Training and Innovation in an Imperfect Labour Market," Review of Economic Studies, Wiley Blackwell, vol. 64(3), pages 445-64, July.
  9. Hashimoto, Masanori, 1981. "Firm-Specific Human Capital as a Shared Investment," American Economic Review, American Economic Association, vol. 71(3), pages 475-82, June.
  10. John T. Addison & Claus Schnabel & Joachim Wagner, 2004. "The Course of Research into the Economic Consequences of German Works Councils," British Journal of Industrial Relations, London School of Economics, vol. 42(2), pages 255-281, 06.
  11. Cohen, Wesley M & Levin, Richard C & Mowery, David C, 1987. "Firm Size and R&D Intensity: A Re-examination," Journal of Industrial Economics, Wiley Blackwell, vol. 35(4), pages 543-65, June.
  12. Gallié, Emilie-Pauline & Legros, Diego, 2012. "Firms’ human capital, R&D and innovation: a study on French firms," Economics Papers from University Paris Dauphine 123456789/6962, Paris Dauphine University.
  13. Acemoglu, Daron & Pischke, Jörn-Steffen, 1999. "Minimum Wages and On-the-Job Training," CEPR Discussion Papers 2177, C.E.P.R. Discussion Papers.
  14. Barrett, Alan, 1998. "Does Training Generally Work? The Returns to In-Company Training," CEPR Discussion Papers 1879, C.E.P.R. Discussion Papers.
  15. Hübler, Olaf & Jirjahn, Uwe, 2001. "Works Councils and Collective Bargaining in Germany: The Impact on Productivity and Wages," IZA Discussion Papers 322, Institute for the Study of Labor (IZA).
  16. Todtling, Franz & Trippl, Michaela, 2005. "One size fits all?: Towards a differentiated regional innovation policy approach," Research Policy, Elsevier, vol. 34(8), pages 1203-1219, October.
  17. Addison, John T & Schnabel, Claus & Wagner, Joachim, 2001. "Work Councils in Germany: Their Effects on Establishment Performance," Oxford Economic Papers, Oxford University Press, vol. 53(4), pages 659-94, October.
  18. Ben Kriechel & Samuel Muehlemann & Harald Pfeifer & Miriam Schuette, 2011. "Works councils, collective bargaining and apprenticeship training," Economics of Education Working Paper Series 0057, University of Zurich, Institute for Strategy and Business Economics (ISU).
  19. Thorsten Schank & Claus Schnabel & Joachim Wagner, 2004. "Works councils - sand or grease in the operation of German firms?," Applied Economics Letters, Taylor & Francis Journals, vol. 11(3), pages 159-161.
  20. Lorenz Blume & Wolfgang Gerstlberger, 2007. "Determinanten betrieblicher Innovation: Partizipation von Beschaeftigten als vernachlaessigter Einflussfaktor," Industrielle Beziehungen - Zeitschrift fuer Arbeit, Organisation und Management - The German Journal of Industrial Relations, Rainer Hampp Verlag, vol. 14(3), pages 223 - 244.
  21. Uwe Jirjahn, 2010. "Works councils and employment growth in German establishments," Cambridge Journal of Economics, Oxford University Press, vol. 34(3), pages 475-500.
  22. John T. Addison & Paulino Teixeira & Thomas Zwick, 2006. "The Impact of Works Councils on Wages," GEMF Working Papers 2006-08, GEMF - Faculdade de Economia, Universidade de Coimbra.
  23. Wesley M. Cohen & Richard C. Levin & David C. Mowery, 1987. "Firm Size and R&D Intensity: A Re-Examination," NBER Working Papers 2205, National Bureau of Economic Research, Inc.
  24. Gary S. Becker, 1962. "Investment in Human Capital: A Theoretical Analysis," Journal of Political Economy, University of Chicago Press, vol. 70, pages 9.
  25. Cohen, Wesley M & Klepper, Steven, 1996. "A Reprise of Size and R&D," Economic Journal, Royal Economic Society, vol. 106(437), pages 925-51, July.
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