A hidden source of innovation? Revisiting the impact of initial vocational training on technological innovation

ABSTRACT

While an increasing number of studies postulate that vocational education and training (VET) activities have a positive impact on the innovative capacity of training companies, empirical evidence on the topic remains contradictory. This study exploits establishment data from a representative survey of German companies to estimate the relationship between firms’ participation in initial VET and their innovation outcomes. Our results show that the direct effects of initial VET on technological innovation in small and medium-sized enterprises (SMEs) are on average quite weak. If at all, a training firm’s initial VET activities are associated with product innovation activities and not with process innovation. Larger effects can only be observed in case of microenterprises with fewer than ten employees. In these firms, initial VET is associated with a higher probability of (local) new-to-market product innovation if it is accompanied by changes in organisational processes that support individual learning and knowledge creation. We conclude from this finding that the knowledge diffusion function of the VET system primarily holds relevance for the smallest of the training companies and that initial VET is only positively related to technological innovation when it goes along with organisational learning in the training company.

KEYWORDS:

• Innovation
• Vocational education and training (VET)
• Knowledge diffusion
• Organizational learning
• SMEs

Acknowledgements

We would like to thank Katarzyna Haverkamp for her valuable comments and suggestions in the early stages of the empirical analysis.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1. At the same time, we fully acknowledge that the relationship between training activities and a firm’s propensity to innovate is complex, as causality may run in opposite directions (Bauernschuster, Falck, and Heblich 2009).

2. The questions asked in the IAB survey 2017 were: ‘In the last business year of 2016, did your establishment improve or further develop a product or service which had previously been part of your portfolio?’ (incremental product innovation); ‘In the last business year of 2016, did your establishment start to offer a product/service that had been available on the market before?’ (new-to-the-firm product innovation); ‘Have you started to offer a completely new product or service in the last business year of 2016 for which a new market had to be created?’ (new-to-market product innovation); ‘Did you develop or implement procedures in the last business year of 2016 which have noticeably improved production processes or services?’ (process innovation).

3. The questions on organisational changes were as follows: ‘Has one of the following changes taken place within your establishment/office in the last two years?: Restructuring of procurement and distribution channels and/or of customer relations; Restructuring of departments or areas of activities; Downward shifting of responsibilities and decisions; Introduction of team work/working groups with their own responsibilities; Introduction of units/departments carrying out their own cost and result calculations; Improvement of quality management’.

4. At this point it should be noted that, especially in the case of small firms, new-to-market product innovations ‘do not necessarily need to be world firsts as innovations, but may gain their innovative character from market boundaries such as a regional business focus or a concentration on specific customer groups.’ (Thomä and Bizer 2013, 38).

Additional information

Funding

No funding received.