Innovation in firms and labour market outcomes

Abstract

This chapter explores how innovation in firms (described as product, process, marketing and organizational innovation) is associated with firm performance and labour market outcomes. For this purpose, it first discusses the evidence to date at the aggregate (i.e. country) level – for as broad a set of economies as possible. Then, it focuses on the firm level based on a group of economies for which data from the Business Environment and Enterprise Performance Surveys (BEEPS) and MENA Enterprise Surveys (MENA ES) – surveys of transition and Middle East and North Africa (MENA) economies, respectively – are available. The chapter finds that there are considerable differences between innovative and non‐innovative firms: innovative firms tend to be more productive, create more jobs, employ more skilled workers (meaning that they employ more educated workers and offer more training) and hire more female workers. Yet, in some cases innovation is associated with more intense use of temporary workers (especially in firms that implement product and process innovations). Moreover, it has been found that sectoral differences might play a role. In this regard, considerable job contraction is observed in non‐innovative low‐technology firms in the manufacturing sector, highlighting the high risk of job loss among low‐skilled workers. Regarding sources of innovation, the chapter shows that while R&D engagement is an important determinant of successful innovation, other drivers, including training, public funding and external acquisition of technologies are relevant. On the basis of these findings, the chapter suggests that adequate education, training and social protection policies can play an important role in both fostering innovation and preparing workers (and firms) effectively for the changing job environment. This means that social partners and other stakeholders will be required to participate in reflections on the types of jobs and skills that will be relevant in the future.

Level of education and knowledge, foresight competency and international entrepreneurship

“…Human capital plays as the primary factor for the investment abroad (Amit et al, 1998), implying that venture capital is a strict process of establishing the perimeter for choosing the right criteria for investments and what will include into it (Manigart et al, 2007). Many of the new companies that want a part of the global market, now in the process of focusing on human capital as a primary tool, due to the international view on the stuffing process the companies have access to the foreign markets through their stuff, which not only partial to the communication factor but also influenced by their background knowledge and their cultural differences (Richiardi and Postolachi, 2017). All this informational knowledge is one of the new strategies that now implemented in the different companies, who want to succeed in the global markets (Barney, 1991).…”

Innovation and job quality. A firm-level exploration

“…Focusing on product innovation, Zhou, Dekker and Kleinknecht (2011), using longitudinal data from 1988 on also for the Netherlands, conclude that firms with high share of fixed-term contracts perform significantly worse regarding innovation in new products (as opposed to imitative new products). In contrast, research from transition Middle East, North Africa and Sub-Saharan African economies found a higher incidence of temporary employment in more innovative firms (Avenyo 2017;Richiardi and Postolachi 2017).…”