LABOUR MARKET RIGIDITY AND FIRMS' R&D STRATEGIES

Mario De Marchi (demarchi@isrds.rm.cnr.it) and Maurizio Rocchi (rocchi@isrds.rm.cnr.it)
Additional contact information
Mario De Marchi: Consiglio Nazionale delle Ricerche,Istituto di Ricerca sull’Impresa e lo Sviluppo,Sezione di Ricerca di Roma, Istituzioni e Politiche per la Scienza e la Tecnologia(Ceris-Cnr), Via dei Taurini, 19, 00185 Roma, Italy
Maurizio Rocchi: Consiglio Nazionale delle Ricerche,Istituto di Ricerca sull’Impresa e lo Sviluppo,Sezione di Ricerca di Roma, Istituzioni e Politiche per la Scienza e la Tecnologia(Ceris-Cnr), Via dei Taurini, 19. 00185 Roma, Italy

CERIS Working Paper from CNR-IRCrES Research Institute on Sustainable Economic Growth - Torino (TO) ITALY - former Institute for Economic Research on Firms and Growth - Moncalieri (TO) ITALY

Abstract: In The traditional explanations of Italian industry’s low commitment to R&D activities mainly rest on the firms’ size and relative specialisation of the national economy. We argue that they are not sufficient to justify the Italian anomaly; instead, in our opinion, it above all depends on the well-known rigidity of the Italian labour market. To show this, we first take into account the variability of innovation patterns through the economic system by adopting Pavitt’s taxonomy as our analytical instrument. We then demonstrate that the main factor underlying Italian industry’s management strategies in research is that supplier-dominated and scale-intensive industries in Italy are desperately superficial in their commitment to R&D as a source of innovation. This situation, as unusual as it appears at first sight, has been so far economically viable, because in the supplier-dominated and scale-intensive categories, and within the limits of technology, research and investment in machinery are interchangeable to some extent as means of innovation. Our results seem to suggest that a substitution effect between spending on R&D and investment in machinery indeed is working in Italy in these two sectors. The fact that the low R&D commitment continues at all stages of the economic cycle suggests that the Italian phenomenon may be the result of a constant tendency among companies to counter the rigidity inherent in the deployment of labour as a factor of production. This rigidity is a circumstance very frequently accounted for in the explanation of the higher economic growth in the US with respect to European countries. The novel and major finding of our study is that the rigidity of the labour market - besides being classifiable in economic models as a generic cause of the slower growth in a European country - emerges as a specific cause in models based on innovation theory, via firms’ lower commitment to R&D.

Keywords: Technological Innovation; Industrial Research; Industrial Policy; Market Labour (search for similar items in EconPapers)
JEL-codes: O32 (search for similar items in EconPapers)
Pages: 19 pages
Date: 2004-06
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.byterfly.eu/islandora/object/librib:358785 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:csc:cerisp:200404

Access Statistics for this paper

More papers in CERIS Working Paper from CNR-IRCrES Research Institute on Sustainable Economic Growth - Torino (TO) ITALY - former Institute for Economic Research on Firms and Growth - Moncalieri (TO) ITALY Contact information at EDIRC.
Bibliographic data for series maintained by Anna Perin (anna.perin@ircres.cnr.it) and Giancarlo Birello (giancarlo.birello@ircres.cnr.it).