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Innovation

Innovation is an important driver of improved competitiveness, productivity and the growth potential of companies, strengthening their position to compete internationally. Alongside technical innovation in products and processes, non-technological innovative practices can also have a positive effect on the innovation capacity of companies. Examples include designing jobs that give employees autonomy, invite problem-solving and encourage teams to organise themselves and their work. These practices include promoting employee participation in decision-making and inviting suggestions for new products and improvements in production and service delivery. It is important for innovation that companies new methods and practices of organising work and decision-making, collecting employees’ views on production or service quality, developing the talent of the workforce but also motivateing and rewarding their employees. Such practices and approaches can also be associated with mutual gains for workers and businesses but also more broadly for the European society. 

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Recent updates

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The report explores plausible and imaginable scenarios examining how telework and hybrid work in the EU might have developed by 2035, and their implications for the world of work. How...

28 April 2023
Publication
Research report

Key findings

  • Establishments that introduce innovations to the market tend, on average, to be large (250 or more employees) and young (10 years or less in operation), according to the ECS 2019. This suggests that there is much potential in the economy for boosting innovation among small and medium-sized enterprises (SMEs) and in establishments more than 10 years old. 
  • Innovative establishments are highly digitalised compared to the EU average. In particular, they are likely to use data analytics to improve their production processes or service delivery. 
  • Innovation is not just a technical process of developing or acquiring technology; it also requires companies to adopt work organisation, direct employee participation and HRM practices that support innovation activities. 
  • Establishments where management facilitates employees to work autonomously and where self-directed teams are prevalent are more likely to innovate in their market than workplaces where the predominant model is one of managerial command and control. The case studies of innovative companies suggest that, where workers have autonomy in their jobs, they are more likely to propose suggestions for new products and services and process improvements. 
  • The management in innovative establishments has high expectations of employees – in terms of helping colleagues, staying longer at work when needed and making suggestions for improvements to the business – and also uses a range of practices to motivate them. The case studies show that managers in innovative companies encourage employees to be creative and to think outside the box. 
  • Establishments that offer comprehensive training and learning opportunities are more likely to innovate than those where the scope for skills development is limited. The case studies suggest that innovation is supported not only by training from external providers, both formal and non-formal, but also by internal non-formal and informal learning facilitated through work organisation practices and job design (‘non-formal’ meaning intentional, structured training that does not necessarily lead to formal qualifications). 
  • A crucial element for fostering innovation is employee participation in organisational decision-making. Establishments that regularly engage with staff and use several means to do so, and where workers have an influence on management decisions, have a higher likelihood of introducing innovations to the market, compared to those establishments characterised by the absence of these practices. 
  • Collaboration with other establishments is positively associated with innovation in companies. Evidence from case studies shows that companies tap into their large networks of collaborators, experts and customers to develop new ideas and to stay up-to-date with new technologies, services, products and processes.

Eurofound research

Eurofound research has explored the paths European companies take towards workplace innovation and their outcomes, based on EU-wide survey data. It has also examined factors, and specifically workplace practices, associated with innovation in European establishments. Research on win-win arrangements helped to better understand whether certain company practices are linked with mutual gains (or win-win outcomes) that help companies to grow and innovate while at the same time benefiting workers.

Eurofound surveys and innovation

Eurofound’s Europe-wide surveys offer comparative analysis on the scale of company innovation and the role played by employee involvement, training and social dialogue in fostering workplace innovation and better working conditions. Other studies at national, sectoral and workplace levels have highlighted cases that have achieved win–win benefits and analysed the elements that underlie them.

Company practices

The European Company Survey (ECS) 2019, the fourth since 2004, and carried out in partnership with sister Agency Cedefop, analyses workplace practices related to work organisation, workplace innovation, human resources policies, employee participation and social dialogue.  

The two Agencies have looked at innovation in EU companies, based on ECS 2019 data and case study research in 2020. The research investigates the characteristics of innovative companies and, in particular, the innovation-enhancing workplace practices that they employ. It offers insight into how these practices link to business innovation and enhance subjective well-being at work, as well as how they contribute to increasing the innovation potential of companies. 

A 2017 ECS study on innovative changes in European companies explores which workplace practices have the strongest links to innovative company behaviour. It looks at innovation in the form of new or significantly changed products or processes, new or improved marketing methods, and organisational change.

Eurofound’s 2015 ECS-based research on workplace innovation in European companies has shown that the competitiveness of companies does not depend solely on their capabilities for technological innovation: it is also shaped by the design and organisation of workplaces and the extent to which organisations are innovative in this regard. 

Working conditions

The European Working Conditions Survey (EWCS) 2015, the sixth since 1990, provides a wide-ranging picture of Europe at work, looking at work organisation, work–life balance, health and well-being at work, employee participation and employee involvement. The EWCS 2015 overview report showed that 67% of employees are at least ‘sometimes’ involved in improving the work organisation or work processes of their department or organisation. A smaller proportion (31%) work in a 'high-involvement organisation’, characterised by a high level of task discretion and a high level of organisational participation. 

Industrial relations

Research on innovative measures through social dialogue at company level identifies how management, employees and their representatives find common solutions to work organisation problems.

Further research on changes in remuneration and reward systems examines the different types of supplementary pay schemes, their prevalence in different countries and sectors across the EU and Norway, and their relevance to different groups of employees. As part of the human resource management practices, remuneration and rewards play a role in encouraging creative thinking, motivating innovative behaviour and rewarding employees. This research shows the extent to which such practices are used in European establishments.

Born global enterprises

‘Born globals’ are young, small and medium-sized companies engaged in international activities immediately after start-up. While showing diversity in some of their other characteristics, one aspect they have in common is that they are highly innovative. Eurofound research on these enterprises explores their employment and economic potential. The study also examines the public support instruments available to these start-up enterprises, such as entrepreneurship and internationalisation support.

Eurofound will explore the impact of crucial innovations in computing and telecommunications technologies in its digitalisation topic.

Key outputs

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Government-backed initiatives to support innovation in business are widespread across the EU. These support measures, if designed and implemented correctly, have the potential to also create jobs – better-quality jobs...

17 October 2018
Publication
Policy brief
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Companies are constantly competing for the next big thing in innovation – the next-generation 3D phone, the quantum computer, the virtual doctor. They fixate on technological breakthroughs and look for...

Blog
eurofound-placeholder

Innovation is an important driver of improved competitiveness, productivity and growth potential. This report explores which workplace practices have the strongest links to innovative company behaviour, looking at innovation in...

22 June 2017
Publication
Research report

EU context

The European Commission recognised as early as in the 1990s that new ways of working would contribute to creating productive, learning and participative organisations. The Commission made workplace innovation a priority in 2012 through the reinforced EU Industrial Policy Communication, supported by the European Workplace Innovation Network (EUWIN) in 2013. Since then, innovation is supported through various EU initiatives. 

The challenges facing Europe following the COVID-19 crisis make the need for innovation more urgent. The NextGenerationEU recovery package along with the Recovery and Resilience Facility (RRF) adopted in February 2021 support the reorientation of activities towards innovation for resilience. Looking to the longer term, policies such as the European Industrial Strategy aim to support the transition to a green and digital economy for which innovation needs to play a big role.

The Commission’s Research and innovation strategy 2020–2024 aims to be an ‘engine of the green and digital transitions’. Research and innovation will remain at the forefront of the EU’s response to the health, social and economic challenges in the aftermath of COVID-19. This is supported by the funding programme Horizon Europe.

In July 2020, the Commission adopted the new European Skills Agenda for sustainable competitiveness, social fairness and resilience. It highlights skills and lifelong learning as crucial for innovation and competitiveness. 

Furthermore, through its commitment to the UN 2030 Agenda for Sustainable Development, the Commission monitors EU progress towards full productive employment, decent work and innovation.

Eurofound’s work on innovation links in with the Commission’s 2019–2024 priority on a European Green Deal and a Europe fit for the digital age. 

 

European Industrial Relations Dictionary 

Eurofound expert(s)

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Sara Riso is a research manager in the Working Life unit at Eurofound. She is involved in research projects in the areas of employment change and restructuring. She joined...

Research manager,
Working life research unit
​Stavroula Demetriades

Stavroula Demetriades is a senior research manager in the Employment unit at Eurofound. She has responsibility for research in the areas of innovation, management practices, hybrid...

Senior research manager,
Employment research unit
Publications results (65)

The EU’s transition to a climate-neutral economy requires nothing short of a clean industrial revolution. This report explores the potential socioeconomic implications of such fundamental change for different European regions and population groups, following a foresight approach. Scenario-focused

19 June 2023

The report explores plausible and imaginable scenarios examining how telework and hybrid work in the EU might have developed by 2035, and their implications for the world of work. How prepared are managers and employees, employer organisations and trade unions, and policymakers for the greater

28 April 2023

The economic and labour market contribution of international businesses is well recognised, but policymakers could do more to help such enterprises to develop their activities. This policy brief explores the workplace practices in export-oriented establishments that may contribute to their success

06 October 2021

The EU has long supported innovation in business and in workplaces. The challenges facing Europe as it emerges from the COVID-19 crisis make the need for innovation more urgent. The NextGenerationEU recovery package requires a reorientation of business activities towards innovation for resilience

01 July 2021

This report is based on the fourth edition of the European Company Survey (ECS), which was carried out jointly by Eurofound and Cedefop in 2019. It describes a wide range of practices and strategies implemented by European companies in terms of work organisation, human resource management, skills

13 October 2020

How do organisations get the best out of their employees? Research on human resource management has found that a key practice is employee involvement: enabling employees to make decisions on their own work and to contribute to organisational decision-making. A high degree of employee involvement

06 July 2020

Cooperatives and social enterprises are recognised for their resilience to cyclical and structural economic changes and their capacity to contribute to local and regional economic development, including social inclusion. In recent years, attention has increasingly focused on their ability to further

12 June 2019

Government-backed initiatives to support innovation in business are widespread across the EU. These support measures, if designed and implemented correctly, have the potential to also create jobs – better-quality jobs – to upskill the labour force, to improve job quality and to boost the employment

17 October 2018

This overview report synthesizes and compares industrial policy capacity within nine European case study regions which have been analysed as part of the pilot project Future of Manufacturing in Europe.

15 January 2018

Innovation is an important driver of improved competitiveness, productivity and growth potential. This report explores which workplace practices have the strongest links to innovative company behaviour, looking at innovation in the form of new or significantly changed products or processes, new or

22 June 2017

Online resources results (9)
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Reinventing business models in a pandemic: Necessity is the mother of invention

The COVID-19 pandemic presented companies with a sudden and unpredictable set of events that put their revenue sources in peril. Faced with lockdown, some had no option but to shut up shop. Others saw a way through by reinventing themselves to respond to physical distancing requirements, changed cus

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Lloyds bank’s digital transformation

Lloyds Banking Group is investing £3 billion (€3.35 billion) in technology and staff to improve its digital services. As a result, the Group has announced that it is cutting over 6,000 existing positions while creating 8,000 new jobs oriented towards digital technologies. The move reflects the

United Kingdom: Report identifies key levers for improving workplace productivity

Amid the extensive debate about the UK’s relatively poor productivity record, a recent report from Acas identifies seven key factors for improving workplace productivity: well-designed work; skilled managers; effective conflict management; clarity about rights and responsibilities; fairness

Croatia: Research shows connection between trust and innovation in Croatian businesses

A recent study examined the relationship between interpersonal trust and innovativeness in Croatian enterprises and found that these are important strategic tools contributing to the company’s success.

Finland: Survey findings underline need for innovation in workplaces

A national survey of well-being at work concludes that only one in four Finnish workplaces can be seen as innovative. A policy report based on the survey identifies a number of ways in which the quality of working life could be improved, such as more systematic innovative thinking, better change

Sweden: Gothenburg municipality implements 30-hour working week

The municipal council of Gothenburg decided in April 2014 to enact a one-year experiment where they would reduce working hours to 30 hours a week with full pay in at least one city department to evaluate the effects of working time reductions on health, employment and quality of work.

Collective bargaining in the first half of 2001 examined

The number of collective agreements concluded in Portugal in the first six months of 2001 increased by some 16% compared with the same period in 2000, and a degree of innovation was witnessed in the content of the agreements. However, the government and social partners are calling for changes to the

New proposals to modernise German industrial relations

On 1 August 1997 the German Machinery and Plant Manufacturers' Association (Verband Deutscher Maschinen- und Anlagebau, VDMA) and the Bavarian regional organisation of the German metalworkers' union, IG Metall, presented a jointly elaborated paper entitled /For competitiveness and employment/ (Für

The Finnish National Workplace Development Programme

The aim of the National Workplace Development Programme is to boost productivity and the quality of working life by making full use of, and developing, staff know-how and innovative power in Finnish workplaces. This is to be achieved by developing human resources and helping organisations to reform

Blogs results (6)
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As we leave behind the lockdowns and business disruptions of COVID-19 and enter a ‘new normal’, it is time to talk about how workplaces might be transformed to drive innovation. Some may baulk at this suggestion, as we continue to grapple with the pandemic fallout, but crises have always been a crad

28 June 2021
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The COVID-19 pandemic compelled governments to take exceptional measures to monitor and control the spread of the Coronavirus. Among them was the introduction in most EU Member States of tracking apps to gather data on citizens who have contracted the virus and to trace their contacts, a measure tha

13 January 2021
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According to the dictionary, an organisation is an organised group of people with a particular purpose. To achieve this purpose, tasks are divided between the members of the group, and the task of some of those people is to manage the others. Interestingly, whereas most tasks are allocated based on

27 November 2020
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Fear has been mounting in the debate around new technologies and the implications for the future of work. But the Coronavirus outbreak is unveiling some real positives of technological advances. Digital communication tools are supporting and enhancing working from home, while innovative companies ar

6 April 2020
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Companies are constantly competing for the next big thing in innovation – the next-generation 3D phone, the quantum computer, the virtual doctor. They fixate on technological breakthroughs and look for new business models. But innovation also needs systems, an organisational structure and people who

18 June 2018
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Europe has gone through significant economic change over the past decade. Businesses have had to manage the challenges posed by the financial crisis, globalisation and a rapidly changing labour market. Eurofound's new report Win-win arrangements: Innovative measures through social dialogue at compan

3 October 2016

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