2009/01 | LEM Working Paper Series | |
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Firm size, managerial practices and innovativeness: some evidence from Finnish manufacturing |
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Heli Koski, Luigi Marengo, Iiro Mäkinen |
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Keywords | ||
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Innovation, firm size, organizational practices, HRM practices
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JEL Classifications | ||
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L25, M54, O31
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Abstract | ||
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In this study we use a survey data on 398 Finnish manufacturing firms
for the years 2002 and 2005 to empirically explore whether and which
organizational factors explain why certain firms produce larger
innovative research output than others, and whether the incentives to
innovate that certain organizational practices generate differ between
small and large firms, and between those firms that are operating in
low-tech and high-tech industries. Our study indicates that there
appear to be vast differences in the organizational practices leading
to more innovation both between small and large firms, and between the
firms that operate in high- and low-tech industries. While innovation
in small firms benefits from the practices that enhance employee
participation in decision-making, large firms that have more
decentralized decision-making patterns do not seem to innovate more
than those with a more bureaucratic decision-making structure. The
most efficient incentive for innovation among the sampled companies
seems to be the ownership of a firm's stocks by employees and/or
managers. Performance based wages also relates positively to
innovation, but only when it is combined with a systematic monitoring
of the firm's performance. |
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