Vertical educational diversity and innovation performance

ABSTRACT

This paper uses panel data of Swiss firms to analyse the impact of education-level diversity in the workforce on innovation performance, addressing endogeneity by exploiting within-firm variation as well as variation in labour supply across regions. We find that vertical educational diversity increases the extensive margin of R&D and product innovation, particularly new product innovation. However, the relationship with process innovation, R&D intensity, and product innovation intensity is insignificant. These results are in line with the idea that vertical educational diversity enhances the creative moment of the invention phase, while it has no effect on the commercialization phase due to the relevance of coordination and communication costs relative to the gains in creativity.

KEYWORDS:

• Vertical educational diversity
• innovation performance
• R&D
• product innovation
• process innovation

JEL:

• O3

Acknowledgements

We thank the participants of the 15th ISS Conference, the KOF-UZH Seminar and the KOF Brown Bag Seminar for helpful comments and suggestions.

Disclosure statement

No potential conflict of interest was reported by the authors.

ORCID

Thomas Bolli http://orcid.org/0000-0002-7317-6862

Ursula Renold http://orcid.org/0000-0003-4196-0019

Martin Wörter http://orcid.org/0000-0003-4467-9134

Notes

1. Leten, Belderbos, and Van Looy (2007), Garcia-Vega (2006), or Bolli and Woerter (2013) found that technological diversity is positively related with new patent applications.

2. We refer to organizational steps and do not consider feedback mechanisms, which are very important but not relevant for the point we want to make.

3. Dropping these observable control variables yields qualitatively similar results.

4. However, our qualitative results hold after dropping the education shares, suggesting that multicollinearity does not drive the results.

5. See http://www.bfs.admin.ch/bfs/portal/de/index/regionen/11/geo/analyse_regionen/03.html for more information.

6. http://www.bfs.admin.ch/bfs/portal/de/index/dienstleistungen/premiere_visite/03/03_02.html.

7. Preliminary analysis suggests that including only Share Trained and the combined Share Advanced and Share Acad in the estimation yields a significantly positive effect of the combined share on innovation performance. Since our analysis focuses on the impact of vertical educational diversity, we do not show these effects.