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Innovation, Growth and Social Cohesion

The Danish Model

Bengt-Åke Lundvall

Written by the scholar who, together with Chris Freeman, first introduced the concept of the innovation system, this book brings the literature an important step forward. Based upon extraordinarily rich empirical material, it shows how and why competence building and innovation are crucial for economic growth and competitiveness in the current era. It also provides a case study of a small, very successful European economy combining wealth creation with social cohesion.
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Chapter 13: Labour Market Dynamics, Innovation and Organizational Change

The Danish Model

Bengt-Åke Lundvall


One very crucial way for firms to acquire new competencies is to hire qualified personnel.1 In this chapter, we shall analyse how firms with different profiles with regard to technical innovation and organizational change behave in relation to the labour market. We shall thus examine differences in patterns with regard to job creation, hiring, firing and new qualification requirements. The analysis refers to a special DISKO subset of the labour force comprising all persons who were employed during the period of 1990–94 at a total of 1610 workplaces for which we have information from the DISKO survey about technical and organizational innovation. In some instances it has been possible to update so that the period covered is 1992–97. Among other things the DISKO survey shows that despite great variation between sectors there is an overriding tendency for firms to move toward a larger degree of functional flexibility through such initiatives as the delegation of responsibility, and planned job rotation (Gjerding 1997). What consequences will these changes have for the entire labour market? By comparing the organizationally most advanced firms with the average regarding their conduct in the labour market (for example quantitative flexibility and labour market exclusion), one can form a picture of how changes in firms’ behaviour may give rise to new labour market tendencies in the future. Our main interest in this analysis is thus how different types of firms fare in terms of job creation and employment stability. We shall also, specifically, ask whether the...

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