Are Employee-Friendly Workplaces Conducive to Innovation?

54 Pages Posted: 19 Sep 2015 Last revised: 25 Jul 2016

See all articles by Jie Chen

Jie Chen

Leeds University Business School, University of Leeds

Woon Sau Leung

The University of Edinburgh Business School, The University of Edinburgh

Kevin P. Evans

Cardiff University - Cardiff Business School

Date Written: July 21, 2016

Abstract

We find strong evidence that firms with employee-friendly workplaces achieve greater innovative success, particularly in industries where innovation is more difficult to achieve. Furthermore, employee-friendly firms were also more inclined to sustain R&D investment during the recent crisis. These findings are consistent with the view that an employee-friendly workplace helps to develop tolerance for failure, which encourages engagement in innovation. We find no support for alternative explanations, such as employee-friendly workplaces helping to attract and retain talented employees and reducing career concerns of executives, which could nurture innovation.

Keywords: Employee-friendly workplace, Employee relations, Employee satisfaction, Innovation

JEL Classification: G30, J28, M14, O31

Suggested Citation

Chen, Jie and Leung, Woon Sau and Evans, Kevin P., Are Employee-Friendly Workplaces Conducive to Innovation? (July 21, 2016). Journal of Corporate Finance, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2662260 or http://dx.doi.org/10.2139/ssrn.2662260

Jie Chen (Contact Author)

Leeds University Business School, University of Leeds ( email )

Leeds LS2 9JT
United Kingdom

HOME PAGE: http://https://business.leeds.ac.uk/about-us/our-people/staff-directory/profile/jie-chen-1/

Woon Sau Leung

The University of Edinburgh Business School, The University of Edinburgh ( email )

29 Buccleuch Pl
Edinburgh, Scotland EH8 9JS
United Kingdom

Kevin P. Evans

Cardiff University - Cardiff Business School ( email )

Aberconway Building
Colum Drive
Cardiff, CF10 3EU
United Kingdom
+ 44 (0) 29 2087 4558 (Phone)
+ 44 (0) 29 2087 4419 (Fax)

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