Employment and innovation in recessions: firm-level evidence from European Countries. (20th September 2022)

• Record Type: Journal Article
• Authors: Peters, Bettina; Dachs, Berhnard; Hud, Martin; Köhler, Christian
• Is Part Of: Industrial and corporate change. Volume 31:Number 6(2022)
• Page Start: 1460
• Page End: 1493
• Publication Date: 2022-09-20
• Subjects: Organizational change -- Periodicals; Organizational effectiveness -- Periodicals; Industrial management -- Periodicals; 658.4062
• DOI: 10.1093/icc/dtac040
• Languages: English
• ISSNs: 0960-6491

Abstract

Abstract: This paper investigates the employment effects of innovation over the business cycle with a large data set of manufacturing firms from 26 European countries from 1998 to 2014. The paper reveals four important findings: First, the net employment effect of product innovation is pro-cyclical and positive except in recessions. Second, product innovators are more resilient in recessions than non-product innovators because they are able to substitute demand losses in old products with new products. As a result, the net employment losses of product innovators are significantly lower in recessions than those of non-product innovators. Third, we find resilience only among small and medium-sized enterprises (SMEs), but not among large firms. Fourth, process and organizational innovations displace labor primarily during upturn and downturn periods.