Be Nice to Your Innovators: Employee Treatment and Corporate Innovation Performance
53 Pages Posted: 2 Jul 2014 Last revised: 8 Jun 2016
Date Written: June 7, 2016
This paper investigates the effect that employee treatment schemes have on corporate innovation performance. We find that firms with better employee treatment schemes produce more and better patents through improving employee satisfaction and teamwork. Additional tests suggest that our main findings cannot be attributed to job security, unionization, reverse causality, and omitted variables. We also find that firms with better employee treatment schemes produce patents that enhance market valuation and facilitate better future operating performance. Collectively, our findings show that treating employees well benefits firms and shareholders, for well treated employees are encouraged to create intellectual property.
Keywords: Employee satisfaction; Corporate innovation; Innovative strategies; Patents; Citations
JEL Classification: G32, M14, M51, O31
Suggested Citation: Suggested Citation