This article explores the link between the organization of work and innovation by developing national aggregate indicators for the EU member states of organizational forms and innovation modes (how firms innovate). The organizational indicators are constructed from the Third European Survey of Working Conditions results for 8081 salaried employees in 2000. The innovation mode indicators are calculated using the results of the third Community Innovation Survey (CIS-3) for innovation activities between 1998 and 2000. The analysis shows that in nations where work is organized to support high levels of discretion in solving complex problems firms tend to be more active in terms of innovations developed through their in-house creative efforts. In countries where learning and problem solving on the job are more constrained, and little discretion is left to the employee, firms tend to engage in a supplier-dominated innovation strategy. Their technological renewal depends more on the absorption of innovations developed elsewhere. These patterns remain when we divide the economies into manufacturing and services. The results suggest that in order to understand national systems of innovation, it is necessary to bring the mode of organization of work into the analysis. Early conceptions of national innovation systems were built upon an analysis of interactive learning between producers and users. Now the analysis needs to be founded also on an understanding of how people interact and learn at the workplace in different national economies. The results also suggest that European policy efforts to improve innovation performance as part of the revised Lisbon strategy would benefit from a stronger focus on the diffusion of innovative forms of work organization. A step in this direction would be to develop indicators of work organization that could be directly linked to innovation performance.

We express our gratitude to the European Foundation for the Improvement of Living and Working Conditions for allowing us to use the results of the Third European Working Conditions Survey. We also thank the DARES, Ministry of Employment, France, for providing financial support for the research upon which this paper is based. We especially thank Alice Lam, Michel Gollac, Bengt-Aake Lundvall, Paul Nightingale and the editors of the JIR for their useful comments on previous versions.

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