The influence of workforce agility on high-growth firms: The mediating role of innovation

Abstract

An agile workforce refers to a workforce that is proactive, flexible and resilient in dealing with non-routine and unpredictable circumstances. Even though past research suggests that agility could have a positive effect on firm performance, there is hardly any empirical evidence on whether agility matters for high-growth firms (HGFs). The purpose of this research is therefore to investigate the extent to which workforce agility increases the likelihood of firms becoming HGFs in the high-tech manufacturing sector of a developing economy, and whether the relationship is mediated by new product innovation. We develop a theoretical framework that explains how and why a firm that has an agile workforce that is proactive in creating new products, flexible in responding to changing environment, and resilient in turbulent times, is more likely to create innovative products, and thus secure temporary monopoly, which increases the likelihood of the firm becoming a HGF. Then, utilizing firm-level data from high-tech manufacturing sector of a developing country, Iran, we test several hypotheses using logistic regressions. We find that workforce agility significantly increases the probability of high-tech manufacturing firms becoming HGFs, but that this relationship is mediated by new product innovation. Implications are drawn for theory and practice.