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Cambridge Journal of Economics 27:123-143 (2003)
Copyright © 2003 Cambridge Political Economy Society

Article

Labour market deregulation, ‘flexibility’ and innovation

Jonathan Michie and Maura Sheehan *

*Birkbeck College.

Address for correspondence: Professor Jonathan Michie, School of Management and Organizational Psychology, Birkbeck College, Malet Street, London WC1E 7HX, UK; email: j.michie:bbk.ac.uk

Abstract

Labour ‘flexibility’ is often portrayed as important to competitive success. Using evidence from an original survey of UK firms, this paper investigates the relationships between firms' use of, on the one hand, various flexible work practices, human resource management techniques, and industrial relations systems and, on the other hand, the innovative activities of those firms. Our results suggest that the sort of ‘low road’ labour flexibility practices encouraged by labour market deregulation—short-term and temporary contracts, a lack of employer commitment to job security, low levels of training, and so on—are negatively correlated with innovation.

Key Words: Innovation • Flexibility • Labour markets • Human resource management


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