The Effect of Temporary Workers and Works Councils on Process Innovation

Christian F Durach, Frank Wiengarten, Mark Pagell

Research output: Contribution to journalArticlepeer-review

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Abstract

Purpose – This study investigates the effects of temporary workers and works councils on process innovations at manufacturing sites. The impact of temporary workers, commonly viewed as a means of operational flexibility and cost savings, on firms’ ability to innovate is underexplored. Works councils represent and help integrate temporary workers, but are often equated with unions, which have been criticized as barriers to innovation, especially in the U.S.
Design/methodology/approach – We use secondary collected by the Institute for Employment Research of the German Federal Employment Agency. Specifically, we conduct a series of regression analyses using 11-year panel data covering the period 2009 to 2019 with 11,641 manufacturing-site-year observations.
Findings – The results suggest that the use of temporary workers initially promotes process innovation, but at too high a level, it impairs firms' ability to innovate. Furthermore, the results suggest that works councils have a positive impact on innovation, and dampen the curvilinear effect found with respect to temporary workers.
Originality/value – Research has largely focused on the cost and flexibility benefits of temporary workers. We analyze the effectiveness of temporary workers in terms of innovativeness. By including works councils, we also consider the contextual environment in which temporary workers are employed. Finally, we reject the assumption that works councils have a similar negative impact as unions on innovation; in fact, we find the opposite.
Original languageEnglish
JournalInternational Journal of Operations and Production Management
Early online date25 Nov 2022
DOIs
Publication statusPublished online - 25 Nov 2022

Keywords

  • process innovation
  • temporary workers
  • work councils
  • employee representation
  • precarious work

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