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The Role of Training and Innovation in Workplace Performance

Staff research paper

This paper by Patrick Laplagne and Leonie Bensted was released on 16 December 1999. It examines the importance of employee training and workplace innovation in determining both labour productivity levels and growth in Australian workplaces.

The paper uses workplace-level data from the Australian Workplace Industrial Relations Survey (AWIRS) to examine the extent to which the use of training and/or innovation by a workplace increases the likelihood that it has higher labour productivity than its competitors, and experiences high labour productivity growth.

The paper is part of ongoing research undertaken by the Productivity Commission on changes in the nature of work and on the determinants of productivity.

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This Staff Research Paper by Patrick Laplagne and Leonie Bensted examines the importance of employee training and workplace innovation in determining both labour productivity levels and growth in Australian workplaces.

Training can lead to an increase in the quality of labour, by equipping employees with greater skills and knowledge (and possibly fostering greater effort). Innovation, in its many forms (eg the introduction of new technology or of new management techniques), can improve capital services and the efficiency of the production process.

The paper uses workplace-level data from the Australian Workplace Industrial Relations Survey (AWIRS) to examine the extent to which the use of training and/or innovation by a workplace increases the likelihood that it has higher labour productivity than its competitors, and experiences high labour productivity growth.

Among other results, the paper finds that:

  • training and innovation are more prevalent in workplaces experiencing strong labour productivity growth;
  • introducing innovation in isolation can promote labour productivity growth, although its returns are increased by the presence of training. Conversely, the evidence suggests that training has been of significant benefit to labour productivity growth only when combined with innovation; and
  • if workplaces are disaggregated based on their efficiency, training emerges as an effective strategy for less efficient workplaces to 'catch up' with competitors, whereas innovation appears to promote labour productivity growth among both technically efficient and inefficient workplaces.

The paper is part of ongoing research undertaken by the Productivity Commission on changes in the nature of work and on the determinants of productivity.

Background information

Leonora Nicol, Media and Publications 02 6240 3239 / 0417 665 443

Preliminaries
Cover, Copyright, Acknowledgements, Contents, Key Points

1 Introduction

2 Recent trends in training, innovation and productivity
2.1 Innovation
2.2 Training
2.3 Workplace productivity
2.4 Empirical literature on the links between training, innovation and labour productivity
Training and labour productivity
Innovation and labour productivity

3 A framework for examining workplace productivity
3.1 Workplace productivity (levels)
Average labour quality
Average capital quality
Interaction of labour and capital quality
3.2 Productivity growth
Productivity growth of less efficient workplaces
3.3 Summary

4 AWIRS data
4.1 Measures of labour productivity levels and growth
4.2 Measures of training
4.3 Measures of innovation

5 Empirical results
5.1 Bivariate analysis
5.2 Multivariate analysis
The ordered probit model
Labour productivity levels
Labour productivity growth
Leading and lagging workplaces
Combined effects of training and innovation
Productivity growth models using panel data

6 Conclusion

A Probit models

B Description of variables

References