Book Reviews

Using the backdrop of an economy emerging from a decade of restructuring and on the brink of the longest expansion on record, this paper is an exploratory work that examines employer-provided training to temporary workers and the characteristics of firms associated with that training. The focus is on the training of two types of temporary workers: intermediated workers employed by temporary agencies and working for other firms and "in-house" temporary workers who are employed by the firm for which they are working. Results indicate that factors associated with the training of regular or standard employees differ from those factors associated with the training of temporaries. Further, factors associated with the training of the two types of temporary workers differ.     

Productivity,innovation strategies and industrial relations in SMEs. Empirical evidence for a local production system in northern Italy

The paper aims to provide an original contribution to evaluating several kinds of relations between four areas of innovation activities – training, technology, organization, ICT (information and communication technologies) – and industrial relations and firm’s economic performance. Quantitative evidence for a SME‐based local production system is provided by exploiting two datasets: the first is derived from a direct survey carried out in 2005 collecting data on innovations, labour flexibility and industrial relations; the second is represented by a panel of official balance sheets data for the period 1998–2004. The analysis is divided in two consequential parts. We first examine the drivers of different innovation strategies and subsequently we exploit innovation indicators as potential drivers of firm’s productivity. The results show that training activities and organizational changes have strong links with many industrial relations indicators, thus emerging as industrial relations driven innovations. On the contrary, ICT and technological innovation seem to be more influenced by firms’ past performances than by industrial relations. The analysis on labour productivity drivers shows that training activities are the most relevant factors; then, ranked consequently, technological innovation, organisational innovations and, finally, ICT also appear to impact on productivity levels. It is worth noting that the role of ICT emerges more robustly when endogeneity is specifically addressed. Finally, the role of firm size seems here to be overshadowed by other drivers.     

PARTICIPATION IN WORKPLACE EMPLOYER‐SPONSORED TRAINING IN CANADA: ROLE OF FIRM CHARACTERISTICS AND WORKER ATTRIBUTES

In this work, we study the role of firm characteristics and worker attributes in determining participation in workplace employer‐sponsored training in Canada using the Workplace and Employee Survey (WES) of Statistics Canada. We attempt to answer the following questions using the rich information of firms that are available in WES data: Does firms' provision of workplace training encourage workers' participation in Canada? How do changes in market competition, organizational changes, and technological innovation affect workers' participation in workplace training in Canada? We find that firms' training provision significantly affects workers' participation in Canada. We also find that increased international competition, organizational changes, and technological innovation are significantly correlated with workers' training participation at workplaces. We note that workers in some sectors and in smaller firms have lower workplace training incidence and older, part‐time, production and marketing/sales workers and workers with preschool children participate less in workplace training. (JEL J080, J240, J290)     

The Incidence and Intensity of Employer Funded Training: Australian Evidence on the Impact of Flexible Work

The interaction between the growth of flexible forms of employment and employer funded training is important for understanding labour market performance. In particular, the idea of a trade‐off has been advanced to describe potential market failures in the employment of flexible workers. This study finds that evidence of a trade‐off is apparent in both the incidence and intensity of employer funded training. Flexible workers receive training that is 50–80% less intense than the workforce average. Casual workers – especially males – suffer more acutely from the trade‐off. This suggests that flexible production externalities may seriously reduce human capital formation in the workforce.     

Firm heterogeneity and trade-induced layoffs: An empirical investigation

We use a novel data set with verified observations of trade-induced layoffs by U.S. firms to study the interaction between firm productivity and trade liberalization as key determinants of firm-level job destruction due to trade. We find that patterns of trade-induced layoffs are broadly consistent with the predictions for firm-level employment generated by the Melitz (2003) heterogeneous firms theory – the number of trade-induced layoffs increases with firm productivity for non-exporting firms but decreases with firm productivity for exporting firms. The fact that exporting firms incur trade-induced layoffs at all invites a refined interpretation of the theory. Our findings suggest that exporting firms may lay off some workers who work in production for their shrinking domestic segments, while also engaging in some within-firm reallocation of workers. We also find that, even after controlling for productivity and export status, larger firms lay off more workers due to trade competition.     

Worker separations in a nonstationary corporate environment

Assessing ten years of unique personnel data from a large firm, this paper investigates how determinants of worker turnover differ between periods of corporate expansion and decline. Performance and career progress considerably reduce the hazard of job separation during downsizing for blue-collar workers, but are less important for white-collar workers. Effects of firm-tenure, occupation, education, training, part-time status, and gender are largely in accordance with the implications from existing models. But no model generates all patterns observed in the data. Age effects are sensitive to retirement options and discontinuous, dropping in response to the anticipation of becoming eligible for early retirement during downsizing and jumping at the actual retirement age.     

Firm Organization,Technology And Performance: An Empirical Study ∗

The purpose of the study is to characterize different styles of work organization in French firms and their current changes and to link them to the use of specific technologies and to firms performance. The data which are used arc of two kinds: a labor force survey (1 470 blue collar) and a business survey (7 089 firms). We show that two main variables create differences among firms' organization devices: the intensity of communication within the workshop and the level of autonomy of workers (facing technological and hierarchical constraints). The use of advanced technologies and the skill of the labor force are positively linked to both organizational variables. Therefore. ‘Communicating organization’ and organizational innovation seem to aim at creating conditions for individual and collective learning on new technologies. They also enhance the ability of the firm to adapt to changing market conditions through technological innovation and inventory reduction, These views are supported by econometric estimation.     

Computers And Productivity In France: Some Evidence

In this paper, we make a first attempt to explore the relationship between computer use and productivity in French manufacturing and services industries. We match information on computer utilization in the work place collected at the employee level in the years 1987,1991 and 1993, with information on firm productivity, capital intensity and average wage available at the firm level. Being based on the answers of very few interviewed employees (only one for 75% of the firms in our samples), our measure of firm computer use is subject to important sampling errors, and hence our estimates of computer impacts are largely affected by random errors in variables downward biases. Nonetheless we find coherent and persuasive evidence that the computer impacts on productivity are indeed positive and that the returns to the firm should at least be in the same range as the returns to the other types of capital. We also show that the sampling errors in measurement biases can be assessed, and we make the general point that econometric studies of the firm can be effectively and substantially enriched by using information collected from workers, even if very few of them are surveyed per firm.     

Measuring and Explaining Innovative Capability: Evidence from Southeast Asia

What causes firm‐level product innovation in developing economies? This paper answers this question by emphasizing the role of process improvements that are influential in product innovation. We construct a firm‐level innovative capability score using novel, broad‐based, but detailed data on various process improvement practices obtained from firms in Southeast Asia. We then investigate the factors that may affect innovative capability. We also estimate the effect of the innovative capability score on product innovation controlling for research and development intensity and other firm characteristics. Our empirical investigation identifies a chief executive officer (CEO)'s past experience at a foreign or large firm, and buyer pressure to adopt international standards as key determinants of innovative capability. Novel and unique findings from our examination include: (i) the impact of a CEO's past experience at a foreign or large firm on the innovative capability is larger for local enterprises and small‐ and medium‐sized enterprises; (ii) the impact of share of foreign workers in the upper managerial levels only appears to be significant in foreign firms and larger firms; and (iii) buyer pressure is a more likely contributor to innovative capability compared with capital tie‐ups with multinational enterprises or joint venture buyers that capture vertical technology transfers. Finally, our empirical results show that a firm in Southeast Asia is more likely to achieve product innovation if the firm has had a higher innovative capability.     

‘Employability-miles’ and worker employability awareness

This article studies the use and impact of a (‘Employability-miles’) voucher scheme. These vouchers could be used for participation in a restricted number of training courses, which all aim to stimulate employees to develop a more active attitude towards their own employability. Using data from two surveys of one firm’s workforce, we find that voucher use is related to various personality traits and personal characteristics. In particular, a worker’s ambition, goal setting and education level are positively related to voucher use. In addition, workers with longer tenure spend their vouchers more often. Conversely, workers with a more positive self-image as well as those who are negatively reciprocal spend their vouchers less often. The negative relation between voucher use and negative reciprocity suggests that workers who are more negatively reciprocal perceive the voucher as an HR tool for outplacement. Further, we find that voucher use positively affects worker employability awareness and willingness to train. Remarkably, participation in non voucher training shows little relation to personality traits. From a human resources (HR) perspective, this finding suggests that by employing a voucher scheme, the firm makes training participation more dependent on employee personality and individual characteristics instead of the HR development strategy of the firm.     

How does knowledge network affect a firm’s explorative innovation? The contingent role of R&D collaborations

Innovation is a process of knowledge recombination [Fleming, L. 2001. “Recombinant Uncertainty in Technological Search.” Management Science 47: 119 p]. Extant literature highlights the importance of a firm’s knowledge base for innovation, while little is known about the structure of a firm’s knowledge base and how it affects the firm’s explorative innovation. Based upon the perspective of network analysis, we portray a firm’s knowledge base as an intra-organisational knowledge network and examine the effects of two structural features of the network – density and centralisation – on the firms’ exploratory innovation. Using a manual collected dataset of 738 Chinese automobile manufacturers, we find that a firm explores fewer new knowledge elements when the firm holds a dense knowledge network or a centralised knowledge network. More importantly, with the increase of a firm’s R&D collaborations with external actors, the negative effect of density is mitigated while the negative effect of centralisation is reinforced. Both theoretical and practical implications are discussed.     

JOB FLOWS AND UNEMPLOYMENT IN AN EQUILIBRIUM UNEMPLOYMENT MODEL WITH FIRM‐SPECIFIC SKILL TRAINING*

We introduce productivity enhancing firm‐specific skill training into the labour search model in which the firm‐specific skill training intensity and the job destruction rate are endogenously determined. It is shown that the higher the intensity of such training, the lower the rates of unemployment, job creation and job destruction. The paper's model provides a theoretical framework to understand the often mentioned peculiarity of the Japanese labour market; prevalently low rates of unemployment, job creation and job destruction in Japan are due to its training system which promotes workers to acquire firm‐specific skills.     

Weaker jobs,weaker innovation. Exploring the effects of temporary employment on new products

This work explores the relationship between temporary employment and product innovation focusing on five major European economies (France, Germany, Italy, Spain and the Netherlands) observed between 1998 and 2012. The analysis distinguishes sectors according to their technological characteristics and regimes finding that industries using temporary employment tend to have a weaker product innovation propensity. The negative correlation between temporary employment and innovation turns out to be stronger in those sectors where tacit firm’s specific knowledge is crucial to the development of innovations. These sectors are identified using both the ‘Cumulativeness’ proxy stemming from Peneder’s classification as well as distinguishing between different Schumpeterian regimes – Schumpeter Mark I vs. II – of knowledge accumulation.     

EXPLAINING INNOVATIVE ACTIVITY IN SERVICE INDUSTRIES: MICRO DATA EVIDENCE FOR SWITZERLAND

In this paper, we analysed empirically the innovative behaviour of firms in the Swiss service sector building on the wide consent in economic literature that demand prospects, type and intensity of competition, market structure, factors governing the production of knowledge (appropriability, technological opportunities), financing conditions as well as firm size are the main determinants of a firm's innovative activity. For the empirical work, we used firm data from nine service industries collected by the Swiss Innovation Survey 1999. We obtained a pattern of explanation of the innovative activity which looked quite plausible across the different types of innovation measures used (input-oriented and output-oriented innovation variables); it was also consistent to that found earlier for manufacturing. In general, the empirical model captured rather the characteristics of the basic decision to innovate rather than those of the decision to choose some level of innovative activity.     

Firms’ human capital, R&D and innovation: a study on French firms

This article investigates the effects of human capital and technological capital on innovation. While the role of technological capital as measured by research and development (R&D) expenditure has been intensively investigated, few studies have been made on the effect of employee training on innovation. This article explores the relationship between innovation and firm employee training. Our methodological approach contributes to the literature in three ways. We propose various indicators of firm employee training. We build a count data panel with a long time-data series to deal with the issue of firms?? heterogeneity. We propose a dynamic analysis. Using dynamic count data models on French industrial firms over the period 1986?C1992, we find positive and significant effects of R&D intensity and training on patenting activity. Whatever the indicators of training our results show that the firm employee training has a positive impact on technological innovation.     

Innovation strategies,process and product innovations and growth: Firm-level evidence from Brazil

Using World Bank ICS 2000–2002 data from Brazilian manufacturing firms, this paper identifies innovation strategies of firms – in particular internal development (“technology make”) and external acquisition (“technology buy)” – and their effect on successful process and product innovations. It subsequently explores the importance of process and product innovations for firm growth. Successful process and product innovations occur mostly through “technology buy” (mostly through the purchase of machinery and equipment), either alone or in combination with a “technology make” strategy. The option of only relying on internal development is less successful. The results on firm growth indicate that innovative performance is an important driver for firm growth. It is particularly the combination of product and process innovations that significantly improves firm growth. Both innovation and growth performance are supported by access to finance. Skills of workforce and management matter, but not necessarily tertiary education levels. The impact of international linkages on innovative and growth performance is mixed.     

Effects of Monitoring Costs on Employment Adjustment and Wage Profiles

I consider the effects of monitoring costs on the wage profile and employment adjustment of older white-collar workers under asymmetric information on workers' efforts towards skill acquisition. A firm has two options to encourage employees to acquire skills: delayed compensation (an upward-sloping wage profile), and monitoring. I show that the high monitoring costs common in white-collar jobs result in a more upward-sloping wage profile and fewer dismissals under a larger "hostage repayment", which is the difference between the wage payment and productivity of older employees.
JEL Classification Numbers: J31, J41.     

Training, search and wage dispersion

This paper combines on-the-job search and human capital theory to study the coexistence of firm-funded general training and frequent job turnovers. Although ex ante identical, firms differ in their training decisions. The model generates correlations between various firm characteristics that are consistent with the data. Wage dispersion exists among ex ante identical workers because workers of the same productivity are paid differently across firms, and because workers differ in their productivity ex post. Endogenous training breaks the perfect correlation between work experience and human capital, which yields new insights on wage dispersion and wage dynamics.     

Employee relations and innovation: an empirical analysis using patent data

This paper investigates the relationship between employee relations (ER) as tracked in the environment, social, and governance (ESG) database provided by MSCI Inc., and innovation as measured by patents and patent citations. Some ER policies, such as broadly based profit-sharing plans, stock option plans, and stock ownership, create a direct link between a firm’s performance and employee compensation and might therefore be expected to encourage successful innovation. In addition, some other aspects of ER, including good pension plans, good union relations, and a variety of specific benefits (such as flex time) might improve innovation performance through their effect on employee morale or institutional loyalty, or simply by creating incentives to stay with the firm. We find that both of these categories of ER – financial incentives and non-pecuniary motivations – have a positive effect on innovation as measured by patenting and patent citations.     

A decomposition of training probabilities

The determinants of workers' training probabilities are analysed. A distinction is made between the unconditional probability that a worker is employed by a firm that provides any training opportunities at all, and the conditional probability that the worker receives training given that s/he works for a firm that provides training. For this analysis a censored version of the bivariate probit model is applied. The results indicate that establishment size, industry dummies, type of schooling, age and experience affect only the unconditional probability, whereas the type of labour contract, working hours and job level affect only the conditional probability. Years of formal schooling affect both probabilities; more highly educated workers are both more likely to work for training-providing firms and, given that they work for such a firm, to be selected for training programmes.