Do unions affect innovation?

摘要

According to the authors, previous research has generally ignored the role of blue collar workers on firm innovation. The article examines the role of blue collar workers on firm innovation by two competing hypotheses from the prevailing views of unionization and to examine the effect of unions on firm innovation activities. The first hypothesis argues that unions promote innovation by providing employees with protection, the latter states that unionization may create misaligned incentives among employees and impede firm innovation. Data for the study included the number of patents granted to a firm and number of future citations received by each patent, obtained from the National Bureau of Economic Research for firm innovativeness and quality of innovation. The other data on unionization are the union election results from the National Labor Relations Board which allows comparing changes in innovation output for firms that elect to become unionized to those that vote against it. Using a standard ordinary least squares approach and regression discontinuity design to establish causality, the empirical analysis was done. The results showed that unionization has a negative effect on firm innovation. It was also found that a union election leads to an 8.7% decline in patent counts and a 12.5% decline in patent citations three years after the election. This result was found robust to alternative choices of kernels and bandwidths and is absent at artificially chosen thresholds that determine union election outcomes. The negative effect of unionization on innovation was present in both manufacturing and nonmanufacturing industries, but it was statistically insignificant in firms located in states with right-to-work legislation where Unions have less power. Results also showed that a cut in R&D spending, reduced productivity of current and newly hired inventors and departure of innovative inventors are possible underlying mechanisms through which unionization impedes firm innovation. It was found that firms shift innovation activities away from states where union elections are successful. (68 refs.)