Organizational innovations, human resources and firm performance: The Emilia-Romagna food sector

Abstract

This paper studies the relationship between organizational innovation, industrial relations and economic performance at the firm level. It adopts an applied perspective by means of a comprehensive survey on a specific industrial sector, the food industry, with the aim of investigating: (i) the degree of organizational innovation and the diffusion of HRM practices; (ii) the relevance of the interaction between unions and top management in the process of decision-making at an operative, organizational and strategic level; (iii) the relations between the intensity of organizational innovation and the quality of industrial relations; (iv) the effects of organizational changes on firm performance. The focus is on firms with bargaining activity at establishment level where worker committees exist. The dataset is derived from a structured questionnaire submitted to union members concerning structural data on firms and local productive units, production flexibility, organizational models, compensation systems, industrial relations and firm performance. The quantitative analysis highlights the following critical elements. First, the firm governance seems characterized by a strong relevance of industrial relations, in terms of “good quality atmosphere” and “involvement of worker representatives and employees”: their action proves to be a stimulus to organizational changes. The set of industrial relations variables does emerge as a significant factor explaining firm innovation intensity. Second, although we cannot ascertain the causal link given the cross-sectional nature of data, firm performance and organizational innovations arise as two elements which are strictly and positively related to each other. Third, the evidence points out that good industrial relations are important as far as the firm performance is concerned; nevertheless their role is mediated by their effects on organizational changes rather than having a direct impact on performance.