The impact of temporary workers on the conversion of innovation efforts into product innovations: the case of Spanish companies

Abstract

In this paper, we study the influence of temporary workers in the relationship between innovation effort and product innovation in a large sample of Spanish manufacturing firms in a six-year period. The article uses a zero-inflated regression model to analyse how the performance of innovation efforts is affected by the impact of temporary employment. Our results show that the use of temporary employment has adverse effects for the conversion of innovation investments into innovation outputs. Firms with higher levels of fixed-term workers have less product innovations in comparison to firms that do not use this kind of workforce. However, this negative impact is less detrimental in technological-intensive sectors. The value of this research for employment relations is salient as workers long-term protection seems to enhance the effectiveness of the innovation process. At the same time, the effects of temporary work vary depending on the sector.