The Impact of Training on Innovation

[We’re pleased to welcome author Benoit Dostie of HEC Montréal. Benoit recently published an article in the ILR Review entitled The Impact of Training on Innovation. Below, Benoit discusses the inspiration for this research, along with the applied methodology:]

The positive impact of firm-sponsored training on workers’ wages and productivity is well documented. At the same time, many studies are highlighting innovation as an important component of firms’ performance.

This paper ILR_72ppiRGB_powerpoint.jpglinks these two ideas and investigates whether firms who invest more in training their workers reap reward through better innovation performance. Bauernschuster, Falck, and Heblich (2009) argue that continuous training guarantees access to leading-edge knowledge and thus increase a firm’s propensity to innovate. In fact, lack of skill within the enterprise is one of the two most frequently reported obstacles to innovation amongst Canadian firms (Statistics Canada (2012)).

To do so, we use longitudinal Canadian linked employer-employee data from 1999-2006 and look at two types of human capital investments, the number of employees who received classroom and on-the-job training; and four measures of innovation: improved and new processes, improved and ne
w products.

Our results show that more training leads to more product and process innovation, with on-the-job training playing a role that is as important as classroom training. These results are important because many policies used by governments throughout the world to encourage firms to invest more in training put more weight toward more formal or structured forms of training like classroom training.

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