The Impact of Employee Experience on Productivity and Firm Innovation: A Study of Italy’s Slowdown

parma emiliaromagna italy europe piazza in the city of parma

[We’re pleased to welcome Francesco Daveri and Maria Laura Parisi. Francesco and Maria recently published an article in ILR Review entitled “Experience, Innovation, and Productivity: Empirical Evidence from Italy’s Slowdown.”]

Italy has been on a declining growth path well before the current crisis. We see this as the unfortunate combination of policy and managerial habits. On the policy side, a string of partial labor market reforms at the end of the 1990s  made inexperienced–hence less productive–workers enter the labor market. On the managerial side, a long-run feature of Italy’s corporate world is its seniority-based system of managerial selection. Evidence shows that senior conservative managers took advantage of cheap unskilled workers as a way to cut costs. This trend, however, also made a dent on the innovation and productivity performance of Italian companies.

The abstract for the paper:

The authors investigate whether the level of employee experience is good or bad for innovation and productivity. Using a sample of Italian manufacturing firms during the early 2000s, the authors find different results for managers’ versus workers’ experience. The ILR_72ppiRGB_powerpointeffect of managerial experience—proxied by age—on firm performance appears to depend on the type of firm; in innovative firms, having older managers and board members has a negative effect on innovation and productivity, while in non-innovative firms, the costs and benefits of having older managers appear to cancel each other out. For workers, the effect of having a high share of inexperienced (temporary) workers is unambiguously associated with low innovation and low productivity. These results also hold when endogenous regime switching is taken into consideration.

You can read “Experience, Innovation, and Productivity: Empirical Evidence from Italy’s Slowdown” from ILR Review free for the next two weeks by clicking here. Want to know about the latest research from ILR Review? Click here to sign up for e-alerts!

*Parma image credited to Mark Goebel (CC)

Francesco Daveri is Professor of Economic Policy at Università Cattolica del Sacro Cuore, Piacenza.

Maria Laura Parisi is Associate Professor of Economics at the University of Brescia.

This entry was posted in Creativity and Innovation, Employees, Innovation, Management and tagged , , , , , , by Cynthia Nalevanko, Editor, Management INK. Bookmark the permalink.

About Cynthia Nalevanko, Editor, Management INK

Founded in 1965, SAGE is the world’s leading independent academic and professional publisher. Known for our commitment to quality and innovation, SAGE has helped inform and educate a global community of scholars, practitioners, researchers, and students across a broad range of subject areas. With over 900 employees globally from principal offices in Los Angeles, London, New Delhi, Singapore, and Washington DC, our publishing programme includes more than 560 journals and over 800 books, reference works and databases a year in business, humanities, social sciences, science, technology and medicine. Believing passionately that engaged scholarship lies at the heart of any healthy society and that education is intrinsically valuable, SAGE aims to be the world’s leading independent academic and professional publisher. This means playing a creative role in society by disseminating teaching and research on a global scale, the cornerstones of which are good, long-term relationships, a focus on our markets, and an ability to combine quality and innovation. Leading authors, editors and societies should feel that SAGE is their natural home: we believe in meeting the range of their needs, and in publishing the best of their work. We are a growing company, and our financial success comes from thinking creatively about our markets and actively responding to the needs of our customers.

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