Spatial Dynamics in the Urban Century
New Horizons in Regional Science series
Edited by Karima Kourtit, Peter Nijkamp and Roger R. Stough
Chapter 8: Innovation capacity, workforce diversity and intra-industrial externalities: a study of German establishments
Knowledge-based economies focusing on production and services need to be innovative in the long-run in order to secure long-term welfare. In a global world where countries compete to create and produce the latest market-leading products, the innovation capacity of a country’s domestic industry is of particular importance. There are various types of innovation, namely the introduction of products new to the market, the improvement of the quality of existing products or the adoption of new technologies (Grossman and Helpman, 1991). In order to remain competitive in the long-run it seems beneficial to consider all of these areas. However, innovation is costly and there is uncertainty regarding its success. According to existing literature, workforce diversity with respect to age, cultural background, human capital and occupations may improve the innovative capacity of an establishment (Van der Vegt and Janssen,2003, Ozgen et al., 2011a, Østergaard et al., 2011, Brunow and Stockinger, 2013). Then fewer resources are required to achieve more innovation. In this chapter we investigate in particular what kinds of establishments are relatively more innovative and undertake more than one type of innovation. For this purpose an ordered logit model is estimated using German survey and administrative data. We consider establishment characteristics, the diversity of the workforce employed and possible regional spillover effects within industries as a proxy for regional innovation systems (Griliches, 1979, Camagni and Capello, 2013).
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