Employee Disputes and Innovation Performance: Evidence from Pharmaceutical Industry

Blake Rayfield and Omer Unsal

No 2019-WP-01, NFI Working Papers from Indiana State University, Scott College of Business, Networks Financial Institute

Abstract: In this study, we use a hand-collected dataset of employee lawsuits to understand the effect of employee allegations on firms’ innovation in a human capital-intensive industry. We gather more than 2,293 employee disputes between 2000 and 2015 and test the relationship between employee lawsuits and Food and Drug Administration (FDA) product approvals in the pharmaceutical industry. We find that employee disputes lower the total number of FDA-approved products. We document that firms with frequent employee allegations maintain low innovation outcomes. Additional results show that case characteristics are an important determinant of FDA approvals; labor unions and case duration delay time-to-approval of submitted products, which may explain the deteriorated innovation outcomes. Overall, our findings highlight the importance of employee treatment in the workplace environment, which is ultimately related to firms’ innovation performance.

Keywords: Institutional Investors; Labor Relations; Innovation (search for similar items in EconPapers)
JEL-codes: G23 G30 G39 O32 (search for similar items in EconPapers)
Pages: 62 pages
Date: 2019-07
New Economics Papers: this item is included in nep-hea, nep-hrm and nep-ino
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