26 January 2023
Innovation is an important driver of improved competitiveness, productivity and the growth potential of companies, strengthening their position to compete internationally.Read more
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.Read less
The European Commission recognised as early as in the 1990s that new ways of working would contribute to creating productive, learning and participative organisations.Read more
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 as it emerges from 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.
- European Commission: Recovery plan for Europe
- European Commission: European industrial strategy
- European Commission: Research and innovation strategy 2020–2024
- European Commission: Horizon Europe
- European Commission: Skills Agenda for Europe
- European Commission: Workplace innovation
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.Read more
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.
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.
- Survey: European Company Survey 2019
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.
- Publication: Innovation in EU companies: Do workplace practices matter?
- Blog: What can companies do to spark innovation in the workplace?
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.
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.
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.Read less
Key outputs over the years
- 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.
Publications & dataTop
The sections below provide access to a range of publications, data and ongoing work on this topic.
- Publications (98)
- Ongoing work (2)
Eurofound publications come in a variety of formats, including reports, policy briefs, blogs, articles and presentations.
Watch the webinar: #AskTheExpert - Game-changing technologies - How will they impact Europe’s economy, work and employment?Event 20 April 2021
A selection of related data on this topic are linked below.
- Data explorer: European Company Survey - Data visualisation
- Data explorer: European Working Conditions Survey - Data visualisation
- Eurofound country profiles: Information on work organisation
- Eurofound will explore the impact of crucial innovations in computing and telecommunications technologies in its digitalisation topic.