The Impact of Labour Flexibility and HRM on Innovation

The Impact of Labour Flexibility and HRM on Innovation

Haibo Zhou (Erasmus University Rotterdam, The Netherlands), Ronald Dekker (Delft University of Technology, The Netherlands & ReflecT at Tilburg University, The Netherlands) and Alfred Kleinknecht (Delft University of Technology, The Netherlands)
Copyright: © 2011 |Pages: 12
DOI: 10.4018/978-1-60960-587-2.ch602
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We investigate the impact of labour relations (including use of flexible labour and certain HRM practices) on a firm’s innovative output. Using firm-level data for the Netherlands, we find that active HRM practices such as job rotation, performance pay, high qualification levels of personnel, as well as making use of employees with long-term temporary contracts contribute positively to innovative output, the latter being measured by the log of new product sales per employee. Furthermore, firms that retain high levels of highly qualified personnel are more likely to introduce products that are new to the market (other than only’new to the firm’). Our findings contribute to the growing literature on determinants of innovative performance.
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Labour Relations In The Netherlands

Among enterprises in the Netherlands, we find a fairly wide spectrum of different types of labour relations and HRM practices. One end of the spectrum covers typically 'Rhineland' enterprises with internal labour markets that offer their personnel good wages, fair protection against dismissal, and long-term commitments. The other end of the spectrum includes enterprises that follow Anglo-Saxon practices; the latter employ lots of labour on fixed-term contracts, labour hired temporarily from temporary work agencies or freelance workers, i.e. self employed entrepreneurs that have no personnel.

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