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Presentation by Andreas Crimmann during the Labour Market Obervatory Hearing on "Innovative workplaces as a source of productivity and quality jobs" of 15.12.2010 in the European Economic and Social Committee
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The impact of sustainability on innovations and firm‘s performance
Andreas Crimmann
European Economic and Social Committee
Labour Market Observatory
Hearing on
"Innovative workplaces as a source of
productivity and quality jobs"
Brussels, December 15, 2010
2
Agenda
1. The MINO-Project
2. Determinants of Innovations
3. Impacts of Innovations
4. Conclusion
3
Agenda
1. The MINO-Project
2. Determinants of Innovations
3. Impacts of Innovations
4. Conclusion
4
Organisational model
Environment: markets,
technologies, institutions
Employees
Innovation Innovation capability
Working and employment conditions
Flexibility/Stability
5
Agenda
1. The MINO-Project
2. Determinants of Innovations
3. Impacts of Innovations
4. Conclusion
6
Hypothesis: higher innovation capability is (i.a.) a function of working and employment conditions
Model: Probit estimation of determinants of product and process innovations 2002/03 and 2005/06
Data: Representative survey data for Germany of the IAB Establishment Panel
References: Crimmann/Evers: Determinants of Innovations: The impacts of working and employment conditions, WISO – special edition, Linz (to be released in 2011)
Determinants of Innovations
7
Good working and employment conditions
Indicators
Equal opportunity measures
Measures for older workers
Firm providing (apprenticeship) training
Firm supports or offers further vocational training
Wage above the collectively agreed scale
Profit sharing
Works council
8
Share of Innovatory Establishments in 2007
Quelle: IAB-Betriebspanel 2008
43
42
35
45
44
67
63
52
48
59
Equal opportunity measures
Measures for older workers
Training
Wage above the collectively agreed scale
Works or staff council
Establishments without... Establishments with...
Source: IAB-Establishment Panel 2008
9
Model I
Product
innovations
2002/2003
Model II
Product
innovations
2005/2006
Model III
Process
innovations
2005/2006
Characteristics of establishments R&D in the establishment (1=yes) 0.2977 *** 0.2387 *** 0.1503 ***
Innovations intended, but not carried out (1=yes) 0.2337 *** 0.3285 *** 0.3288 ***
Investments in information and communication technology (1=yes) 0.0509 * 0.0209 0.0525 **
Investments in production facilities, office equipment (1=yes) 0.0578 ** 0.0498 ** 0.0424 **
Branch establishment (1=yes) 0.1040 *** -0.0188 0.0091
West Germany (1=yes) 0.0145 -0.0273 0.0421
Share of highly skilled employees 0.0243 0.1234 * -0.0121
Share of part-time employees -0.1333 ** -0.0584 0.0257
Indicators of sustainability
Equal opportunity measures (1=yes) 0.0261 0.0899 *** 0.1076 ***
Measures for older workers (1=yes) -0.0043 0.1123 *** 0.0499 **
Apprenticeship training (1=yes) 0.1251 *** 0.0899 *** 0.0243
Firm providing further vocational training (1=yes) 0.0509 * 0.0597 *** 0.0375 *
Wage above the collectively agreed scale (1=yes) 0.0382 0.0669 *** 0.0411 **
Profit sharing (1=yes) 0.0777 *** 0.0606 ** 0.0496 **
Works or staff council (1=yes) 0.0003 -0.0324 0.0032
Control Variables
Firm size (number of employees) *** *** ***
Principal shareholder *** *** ***
Industrial sectors *** *** ***
Likelihood-Ratio-Test (χ2) 638.57 *** 640.55 *** 623.61 ***
Pseudo-R2 0.23 0.22 0.20
Number of Cases 2663 3018 3016
*/**/*** shows significance on the 10/5/1 %-level. Marginal effects with heteroscedastticty-robust standard errors. Source: IAB Establishment panel 2001-2007
Determinants of Innovations
10
Agenda
1. The MINO-Project
2. Determinants of Innovations
3. Impacts of Innovations
4. Conclusion
11
Impacts of Innovations
Hypothesis: (product) innovations increase firm performance
Method: Propensity-Score-Matching
Estimation of the propensity score:
Determinants of innovations in 2002/03 (Treatment)
NN-Matching: Comparison of firm performance of „statistical twins“
Data: IAB-Establishment Panel 2001-2009
12
Dependent Variables (Matching)
Annual average growth rates of performance indicators:
(2004 – 2008 compared with status in 2001)
of overall employment
of revenues
of labour productivity (added value per employee)
Change in (subjective) profit situation (0=insufficient to 4=very good)
13
The Effect of Product Innovations in 2002/03 on…
Source: IAB-Establishment Panel 2001-2009
14
The Effect of Radical Innovations in 2002/03 on…
Source: IAB-Establishment Panel 2001-2009
15
Agenda
1. The MINO-Project
2. Determinants of Innovations
3. Impacts of Innovations
4. Conclusion
16
Conclusions
Empirical Evidence
1. Attractive working and employment conditions go along with a higher probability of innovations
2. Subsequently, such innovations significantly increase firm‘s performance
Lessons learned
1. Equal opportunities for all groups of employees enhance innovation capability
2. Investments in proper working and employment conditions are sustainable and efficient for firms
Discussion
Andreas Crimmann
Institute for Employment Research
Regensburgerstrasse 104
90748 Nuremberg
Germany
18
Back-Up
19
0
2000
4000
6000
8000
10000
12000
14000
16000
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
4265 4138 4096 4029 4102 4289 4427
8416
9849 10105 10090 10104 10103 9856 9630 9361 9525
4313 4748
4905 5335
5515
5688 5303 5767 5585 5718 5593 6014 6095 5998 Ostdeutschland
Westdeutschland
8342 8850
9194 9762
13931
15537 15408 15857 15689 15821
15449 15644 15456 15523
Source: IAB-Establishment Panel 1993-2009
The IAB Establishment Panel: Responding Establishments
20
Radical innovations: Have you started to offer a completely new product or service within the last two years for which a new market had to be created?
Incremental innovations: Has your enterprise improved or further developed a product that has been part of its line for longer than two years in total?
Product imitations: Has your company, in the last two years, started to offer a product/service that had been on the market before?
Process innovations: Did you develop or implement procedures which have noticeably improved production processes or services during the last two years?
Innovations in the IAB Establishment Panel
21
Impacts of Innovations
How do innovations affect the firm performance? Crimmann, Evers, Günther, Guhr, Sunder (2010): Betriebliche Entwicklung von Innovatoren im
Vergleich zu Nicht-Innovatoren im Verarbeitenden Gewerbe, in: Wirtschaft im Wandel (10/2010)
Impact of market innovations in manufacturing sector
Positive effects on employment- and turnovertrend
No significant effects on productivity development and subjective profit situation
3 to 5 years after innovation the performance difference (employment, revenues) in East-Germany between innovators and Non-Innovators is higher compared to West-Germany