Is flexible labour good for innovation? Evidence from firm-level data

Alfred Kleinknecht, Flore N. van Schaik, Haibo Zhou

Research output: Journal PublicationArticlepeer-review

95 Citations (Scopus)


Whether the use of flexible workers is damaging to innovation or not depends on the dominant innovation regime in a sector. In sectors with a 'routinised' innovation regime, high shares of low-paid temporary workers have a negative impact on the probability that firms invest in R&D. In sectors that tend towards a 'garage business' regime, however, flexibility has no impact. The two innovation regimes differ in the nature of their knowledge base: reliance on generally available knowledge or dependence on a firm's historically accumulated knowledge base. Innovation in the latter regime benefits from longer job durations. Our results are consistent with findings in macro-level studies that coordinated market economies with rigid labour markets have higher labour productivity gains than liberalised market economies.

Original languageEnglish
Article numberbet077
Pages (from-to)1207-1219
Number of pages13
JournalCambridge Journal of Economics
Issue number5
Publication statusPublished - Sept 2014
Externally publishedYes


  • Determinants of R&D
  • Entrepreneurship
  • Routinised innovation
  • Schumpeterian innovation models
  • Varieties of capitalism

ASJC Scopus subject areas

  • Economics and Econometrics


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