Adoption of Techno-Organizational Innovations, and Industrial Relations in Manufacturing Firms: An Analysis for a Local Industrial System

The economic and managerial literature emphasizes the role of innovative managerial models coupled with innovative technological paths in improving firm performance1. Both types of innovation have been widely studied, often in distinct theoretical and empirical branches of research. Recent work addresses primarily organizational themes in the field of labour participation and human resources management practices. Since technology and organization, as will be more extensively explained below, are likely to co-evolve and mutually influence each other, the empirical analysis should address both themes. This contribution examines the innovations adopted by firm managements, their characteristics in terms of organizational change versus technological innovation, and the related degree of employee involvement. Of course, the issue of worker participation in organizational models leads inevitably to the role of worker representatives and unions and the distinction between direct and indirect participation in the domain of industrial relations. The analysis, which addresses the adoption of techno-organizational innovations is based on information collected through a structured questionnaire addressed, in personal interviews, to managers of manufacturing firms with at least 50 employees, located in the province of Reggio Emilia, Emilia-Romagna. The sample comprises 199 firms out of 257 which constitute the total firm population. The analysis highlights a series of interesting results concerning the relationship between techno-organizational innovation, on the one hand, and short- and long-term flexibility in labour services, industrial relations and past firm performance, on the other. The local industrial system of Reggio Emilia emerges as a complex one, primarily characterized by a high degree of dynamism, with important variations and exceptions to this general feature. Innovation intensity is high and mainly driven by managerial initiatives, but with an important role played by union delegates and employees in the field of innovative labour organization. The organizational realm is indeed likely to constitute the most suitable field for further fruitful experimentation in the field of worker participation. The intensity of innovation activity among firms emerges as being strongly associate with firm-specific features, first of all their dimension in terms of employees: medium-large firms with at least 250 employees show a higher adoption rate of techno-organizational innovations, while some weakness characterizes small firms. Additional factors positively affecting innovations are: a higher foreign market orientation, the utilization of in/out-sourcing, a low hierarchical macro-structure, and a workforce with a significant share of blue-collar workers, mostly specialized. Recent hiring policies of the firms are strictly associated with innovation intensity in the organizational realm. However this evidence should not over-emphasize the role of short term flexibility in labour services with respect to long-term flexibility, which proves to be effective in shaping organizational innovation through training and investment in skills and competencies’ development. The role of industrial relations, together with managerial initiatives to increase employee involvement, does have a relevant impact on the organizational structure of the firm, the intensity of its innovative efforts, its ability to benefit from the flexibility of labour services and labour contracts, and, eventually, to accomplish better economic performance. Though these results, requiring more intense future research, should not be overstated, it seems reasonable to state that a high level and quality of social dialogue is an important condition for the implementation of new technologies and organizational practices.