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Do young innovative companies create more jobs? Evidence from Pakistani textile firms

Author

Listed:
  • Wadho, Waqar

    (Lahore School of Economics)

  • Goedhuys, Micheline

    (UNU-MERIT)

  • Chaudry, Azam

    (Lahore School of Economics)

Abstract

Using unique innovation survey data collected among a homogenous sample of firms active in the textiles and apparel sector in Pakistan, this paper analyses the role of innovation for employment growth. In particular, it develops and tests the hypothesis that innovation is conducive to employment creation, and that this is especially the case for smaller and younger firms, supporting the hypothesis that young innovative companies grow faster by engaging in riskier and more radical innovation to catch up with incumbent firms. We find empirical evidence for these hypotheses, which is robust to different model specifications and estimation techniques and to different measures of innovation. Young innovative companies also perform well in absolute employment creation making them interesting from a policy perspective.

Suggested Citation

  • Wadho, Waqar & Goedhuys, Micheline & Chaudry, Azam, 2019. "Do young innovative companies create more jobs? Evidence from Pakistani textile firms," MERIT Working Papers 2019-002, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    • Handle: RePEc:unm:unumer:2019002
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    File URL: https://www.merit.unu.edu/publications/wppdf/2019/wp2019-002.pdf
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    References listed on IDEAS

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    Cited by:

    1. Naudé, Wim, 2019. "The Race against the Robots and the Fallacy of the Giant Cheesecake: Immediate and Imagined Impacts of Artificial Intelligence," IZA Discussion Papers 12218, Institute of Labor Economics (IZA).
    2. Pineli, Andre & Narula, Rajneesh & Belderbos, Rene, 2019. "FDI, multinationals and structural change in developing countries," MERIT Working Papers 2019-004, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).

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    More about this item

    Keywords

    Technological innovation; Firm growth; Employment growth; Quantile regression; Textiles; Pakistan;
    All these keywords.

    JEL classification:

    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • L67 - Industrial Organization - - Industry Studies: Manufacturing - - - Other Consumer Nondurables: Clothing, Textiles, Shoes, and Leather Goods; Household Goods; Sports Equipment
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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