Are Employee-Friendly Workplaces Conducive to Innovation?
54 Pages Posted: 19 Sep 2015 Last revised: 25 Jul 2016
Date Written: July 21, 2016
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: Suggested Citation