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Entrepreneurial innovation in Europe - A review of 11 studies of innovation policy and practice in today’s Europe

Enlargement and innovation
Creation of innovative firms and employment
Innovation finance
Industrial relations
Taxation and innovation
Industrial relations

Chapter 4 summarises a study of the impact of different industrial relations policies on innovation in firms . The study develops a generic model of ‘innovation-friendly’ industrial relations policies, distinguishing between indirect employee participation through trade unions and works councils and direct, face-to-face consultation and delegation. The great majority of firms have not yet implemented even the most basic forms of employee consultation, and public policy has a key role in stimulating debate on the types of industrial relations policies that promote innovation.

4.1 The impact of industrial relations on innovation
  The impact of industrial relations on innovation

NB-NA-17060-EN-C, ISBN 92-894-5666-3
Innovation papers No 36 - Downloadable
Study team led by: KU Leuven (Belgium)

Key findings
  • Employee participation in workplace industrial relations may be direct or indirect.
  • Though in theory participation should encourage innovation, in fact studies are inconclusive as to whether indirect types of ‘industrial democracy’ – trade unions or works councils – are good for innovation or not.
  • The evidence is mounting that direct participation – through consultation and delegation of responsibility about immediate work tasks – does lead to a more innovative approach.
  • Direct participation is practised in two-thirds of companies in Scandinavia and the Netherlands, but only about half of companies in the rest of Europe. Resistance is based on grounds of culture and cost.
  • Western European countries exhibit four styles of industrial relations. Along the spectrum from co-operative to adversarial these are the Nordic, the ‘core’, the Anglo-Saxon and the Mediterranean styles.
  • More research is needed on the relationship of wage bargaining and work flexibility to innovation.
  • Trade unions should be invited to help formulate innovation strategies.