Flexible labor and innovation performance

Evidence from longitudinal firm-level data

Working paper (2010)

Authors

R Dekker Ronald.Dekker@tudelft.nl
A.H. Kleinknecht TU Delft, Technology, Policy and Management, Innovation Systems
H Zhou Erasmus University Rotterdam, Erasmus School of Economics, CASBEC
SMEs OSA longitudinal data Innovation performance New product sales Numerical flexibility RePEc Functional flexibility
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Published Date

12-04-2010

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Abstract

Firms with high shares of workers on fixed-term contracts have significantly higher sales of imitative new products but perform significantly worse on sales of innovative new products (“first on the market”). High functional flexibility in “insider-outsider” labor markets enhances a firm’s new product sales, as do training efforts and highly educated personnel. We find weak evidence that larger and older firms have higher new product sales than do younger and smaller firms. Our findings should be food for thought to economists making unqualified pleas for the deregulation of labor markets.