The Impact of Labour Flexibility and HRM on Innovation

It tends to be generally recognized that firms need to be innovative in order to sustain their competitive advantage (e.g. Brown and Eisenhardt, 1997; Cohen and Levinthal, 1990; Leonard-Barton, 1995; McGrath, 2001; Tsai, 2001). Innovation can be regarded as a business process which creates unique and perceptive ideas that are being pushed towards commercial success (e.g. Verloop, 2004). With the increasing availability of firm-level data such as through the European Community Innovation Survey (CIS) exercise by the European Commission, econometric studies of determinants of innovative behaviour are growing in recent years. This literature focuses on determinants of innovation such as market structure, firm size, (regional and international) knowledge spillovers, R&D collaboration, conditions for appropriation of innovation benefits, and others. By lack of good data on firm level labour relations within the CIS questionnaire, there are only sparse studies on the latter. This is ABStrAct