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Firm size, managerial practices and innovativeness: some evidence from Finnish manufacturing

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  • Heli Koski
  • Luigi Marengo
  • Iiro Mäkinen

Abstract

In this study we use a survey data on 398 Finnish manufacturing firms for the years 2002 and 2005 to empirically explore whether and which organizational factors explain why certain firms produce larger innovative research output than others, and whether the incentives to innovate that certain organizational practices generate differ between small and large firms, and between those firms that are operating in low-tech and high-tech industries. Our study indicates that there appear to be vast differences in the organizational practices leading to more innovation both between small and large firms, and between the firms that operate in high- and low-tech industries. While innovation in small firms benefits from the practices that enhance employee participation in decision-making, large firms that have more decentralized decision-making patterns do not seem to innovate more than those with a more bureaucratic decision-making structure. The most efficient incentive for innovation among the sampled companies seems to be the ownership of a firm's stocks by employees and/or managers. Performance based wages also relates positively to innovation, but only when it is combined with a systematic monitoring of the firm's performance.

Suggested Citation

  • Heli Koski & Luigi Marengo & Iiro Mäkinen, 2009. "Firm size, managerial practices and innovativeness: some evidence from Finnish manufacturing," LEM Papers Series 2009/01, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    • Handle: RePEc:ssa:lemwps:2009/01
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    References listed on IDEAS

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    Cited by:

    1. Spyros Arvanitis & Florian Seliger & Tobias Stucki, 2013. "The Relative Importance of Human Resource Management Practices for a Firm's Innovation Performance," KOF Working papers 13-341, KOF Swiss Economic Institute, ETH Zurich.

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    More about this item

    Keywords

    Innovation; firm size; organizational practices; HRM practices;
    All these keywords.

    JEL classification:

    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • M54 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Labor Management
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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