Abstract

Whether making labor market flexible is a topic of political debate in most developed countries due to the positive impact of flexibility on economic growth. Using a sample of R&D-oriented Japanese start-ups, this paper aims to shed light on the relationship between flexible labor and innovation of start-ups, which has been overlooked in the literature. Our results indicate that numerical flexibility using temporary employees contributes positively to technological innovation performance while negatively to patent application. External labour turnover of regular employees has a positive impact on patent application. Based on our results, implications to literature and economic policies are discussed.

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