Small Firm Innovation Performance and Employee Involvement
KU Leuven - Department of Economics
Centre for European Economic Research (ZEW); Catholic University of Leuven (KUL)
ZEW - Centre for European Economic Research Discussion Paper No. 12-013
It is known that small firms rely mainly on the CEO’s individual knowledge for developing innovations. Recent work suggests that this approach is inefficient since it underutilizes other employees’ knowledge. We study to which extent using CEOs, managers and non-managerial employees’ ideas enhances small firms’ innovation performance. A Heckman selection model on 305 small firms shows that not only CEO’s and managers’, but also non-managerial employees’ ideas contribute to innovation performance. However, contributions depend heavily on the individuals’ area of expertise and on whether product or process innovation is desired. Our findings enrich the current view on the entrepreneurial team, but also warn against the implementation of one-size-fits-all employee involvement programs in small firms.
Number of Pages in PDF File: 46
Keywords: Employee involvement, upper echelon, non-managerial employees, innovation performance, small firms
JEL Classification: M12, O31, O32working papers series
Date posted: March 5, 2012
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