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Are employee-friendly workplaces conducive to innovation?

Jie Chen, Woon Sau Leung and Kevin P. Evans

Journal of Corporate Finance, 2016, vol. 40, issue C, 61-79

Abstract: 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 (search for similar items in EconPapers)
JEL-codes: G30 J28 M14 O31 (search for similar items in EconPapers)
Date: 2016
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Handle: RePEc:eee:corfin:v:40:y:2016:i:c:p:61-79