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Firm’s innovation strategies and employment: new evidence from Uruguay

Author

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  • Carlos Bianchi

    (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía)

  • Hugo Laguna

    (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración)

Abstract

A large and rich body of literature has shown that the relationship between innovation and employment is complex and dynamic in nature. From a firm’s level analysis, recent researches have shown heterogeneous empirical patterns for developed and developing countries. This paper contributes by inquiry in the role of innovation strategies as determinants of the firm’s employment growth in a Latin American small middle-income country. Adapting econometric structural models currently in vogue, we discuss the effects of three innovation strategies (Make, Buy, Make&Buy) on the firm’s workforce growth. In line with the literature, we identify a significant positive relation between product innovation associated with Make and Make&Buy strategies, however, on the contrary to most recent research we find a positive and significant effects of process innovation associated to Buy strategies. Considering technological, sectoral and firm characteristics, our findings show a clear positive effect of any innovation strategy in the growth of the firm’s workforce. Meanwhile, no innovative strategies negatively affect workforce growth. Our findings contribute by deepening the understanding of the firm level determinants of employment in developing countries. We analyze our result in the light of a recent but extensive evidence on the relationship between innovation and employment at firm’s level in Uruguay. In particular, we discuss the traditional explanation on the firm’s technological behavior in Latin America, to discuss the effects on employment of integrative innovation strategies in Uruguay.

Suggested Citation

  • Carlos Bianchi & Hugo Laguna, 2020. "Firm’s innovation strategies and employment: new evidence from Uruguay," Documentos de Trabajo (working papers) 20-06, Instituto de Economia - IECON.
  • Handle: RePEc:ulr:wpaper:dt-06-20
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    Cited by:

    1. Maximiliano Machado, 2021. "Heterogeneous Innovation Persistence: Evidence From Uruguayan Firms," Documentos de Trabajo (working papers) 21-04, Instituto de Economia - IECON.

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    More about this item

    Keywords

    innovation strategies; employment; Latin America; Uruguay;
    All these keywords.

    JEL classification:

    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand

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