Labour, unions and R&D in Italian firms

Abstract

How and to what extent does organized labour contribute to shaping firms’ competitive strategies by fostering innovation and investments in R&D? Drawing on insights from evolutionary theories and industrial relations studies, this paper empirically investigates how firm-level collective bargaining impacts firms’ investments in intangible assets, including R&D. The paper underlines how in the workplace context, where workers and managers pursue conflicting interests, the presence of a strong trade union able to bargain can empower workers’ voice and persuade management to invest in innovation related assets rather than compete through cost cutting strategies. We leverage a comprehensive and representative survey of Italian non-agricultural companies conducted by the National Institute for Public Policy Analysis to test these predictions. Baseline estimates indicate that firm-level bargaining, particularly in highly unionized firms, is linked to investments in R&D and other intangibles. Further analysis suggests that work organization clauses are key drivers of this positive relationship.