The role of employee relations in driving innovation: moderating effects of firm size and slack resources

초록

Employee relations have been examined as one of the drivers of innovation. The environments surrounding firms are becoming increasingly complex and ambiguous, making it much harder for firms to minimise agency problems and set desirable behaviours for innovation. Therefore, the objective of this study was to investigate the relationship between employee relations and innovation using Kinder, Lydenberg, and Domini (KLD), Compustat, and US patent data. The results showed that employee relations were positively associated with innovation. In addition, this association became stronger for larger firms and those with more slack resources. These results suggest that employee relations represent an important factor that encourages innovation. Thus, to be innovative, large firms with more slack resources need to build good employee relations in a more active manner.

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