We present a novel measure of firm-level employment stability, defined as one minus a firm's employment elasticity with respect to its sales. We find that employment stability is positively associated with innovation output, measured by the number of patents and subsequent citations, and the originality and generality of the patents. Our findings suggest that employment stability enhances employees' incentives for innovation by providing tolerance for failure.
Corresponding author email@example.com
Project namenew faculty research support fund of the College of Business School at Hongik University
- Employment stability
- tolerance for failure