Creative and science oriented employees and firm-level innovation

Abstract

This paper examines the link between innovation and the endowments of creative and science-oriented STEM-Science, Technology, Engineering and Mathematicsworkers at the level of the firm and at the city-/regional-level in Germany. It also looks into whether the presence of these two groups of workers has greater benefits for larger cities than smaller locations, thus justifying policies to attract these workers in order to make German cities 'smarter'. The empirical analysis is based on a probit estimation, covering 115,000 firm-level observations between 1998 and 2015. The results highlight that firms that employ creative and STEM workers are more innovative than those that do not. However, the positive connection of creative workers to innovation is limited to the boundaries of the firm, whereas that of STEM workers is as associated to the generation of considerable innovation spillovers. Hence, attracting STEM workers is more likely to end up making German cities smarter than focusing exclusively on creative workers.

Skills combinations and firm performance

“…This leads us to our second contribution, where we show that the benefits of both STEM and management skills are largely realised in combination with creative skills. This represents a novel and valuable finding that extends previous related work, which found a positive impact of STEM and creative skills (Brunow et al 2018;Sapsed et al 2013;Siepel et al 2016,) and STEM and management skills (Siepel et al 2017). By showing that superior performance is achieved by those firms that invest in skills combinations, we recognise the importance of the breadth of knowledge for firms, particularly smaller firms.…”

“…Siepel et al (2016) find that use of creative skills alone has no impact on firm performance or innovation outcomes. In contrast, Brunow et al (2018) find limited positive impacts on innovation outcomes for firms employing creative workers, but the effect identified is smaller than the interaction effect of creative and STEM skills together.…”

“…There is a growing body of literature that attempts to quantify the benefits of science, technology, engineering and mathematics (STEM) skills at the regional level (e.g. Winters 2014;Peri et al 2015;Wright et al 2017;Brunow et al 2018). In this literature, STEM skills are generally proxied by the number of workers with a STEM background in a particular city or region.…”

“…In particular, the work of Bloom, van Reenen and colleagues (Bloom and van Reenen 2007;Bloom et al 2019) has documented the impact of management practices on firm performance, generally finding evidence supporting the link between improved managerial practice and firm performance. Much of this literature has been based on analysis of surveys of managerial practice, such as the US Managerial and Organizational Practices Survey (MOPS) (see Bloom et al 2019) Brunow et al (2018) showed that the combination of creative and science skills is associated with higher levels of innovation. Evidence is fairly scarce also as concerns the combination of STEM and management skills.…”

“…While debates on STEM, creative and management skills remained separate for some time, the growing realisation that there may be complementary effects between these skills led them to increasingly converge over recent years. This has manifested in the rise of a movement advocating to add arts to STEM education, resulting in 'STEAM'-science, technology, engineering, arts, and mathematics-curricula (Daugherty 2013), which has coincided with growing evidence about the interactive effects of STEM and creative occupations at the regional level (Brunow et al 2018).…”