Summary:
This paper examines the relationship between employee job satisfaction and firm innovation. Theoretically, this relationship is ambiguous. On the one hand, according to stakeholder theory, improved job satisfaction can provide additional compensation and incentives to employees, enhancing their engagement in long-term business activities and reducing their expectation of immediate rewards from short-term activities. Given the high-risk, long-term nature of innovation projects, these effects would be beneficial to firms' innovation and long-term growth. On the other hand, improved job satisfaction may also have a negative impact on firm innovation. Due to agency problems, managers may try to increase employees' job satisfaction by promising high salaries and benefits in exchange for favors. If the increase in job satisfaction reflects the presence of these effects, it should be detrimental to firm innovation. Moreover, programs designed to improve job satisfaction have high costs, which can be deleterious to firm performance if firms consequently invest less in innovative projects. We conduct empirical analyses in this paper to explore the ambiguous relationship between employees' job satisfaction and corporate innovation. We measure job satisfaction using the “China's 100 Best Employers Award” list. Our full sample consists of 16,876 firm-year observations for firms listed on the Shanghai and Shenzhen stock exchanges between 2011 and 2017. Our baseline results show that the “Top 100” best employers apply for more patents than other listed companies. To eliminate self-selection bias, we use the propensity score matching strategy (PSM) to find a group of non-“Top 100” firms with characteristics similar to the “Top 100” firms. We find that in the PSM sample, the “Top 100” firms apply for about 47% more patents than the matched firms. In addition, we find that job satisfaction mainly improves “Top 100” firms' innovative patents and patents for utility models. Further tests show that job satisfaction mainly improves firm innovation by increasing firms' tolerance of failure. Last, we provide evidence that job satisfaction has a significantly positive effect on firms' innovation efficiency and total factor productivity. Our paper contributes to several stands of the literature. First, we contribute to research on the labor force and innovation. Most studies explore the impact of employees' stock ownership, the employee-manager pay gap, and employees' income tax on corporate innovation. In this paper, we examine how employees' job satisfaction affects firm innovation by using inclusion in the “China's 100 Best Employers” list as a measurement of job satisfaction. Second, most studies mainly discuss the impact of labor protection on firm behavior from the perspective of stakeholder protection. Although policy changes can enhance labor protection through legislation, firms' willingness to treat employees well may not increase simultaneously. Consequently, employees' job satisfaction may not change significantly. Unlike studies that focus on the effects of labor protection, we examine how employees' perceptions of firms' incentive system, culture, training, and organization affect their human capital investment in innovation activities. Finally, our study has policy implications. At present,people tends to pursue better quality of life and greater job satisfaction. Therefore, the previous high-speed economic growth pattern based on sacrificing employees' welfare may no longer be sustainable. Our study provides empirical evidence for this view. These results indicate that modern enterprises should not only rely on employees' hard work but also pay attention to their multifaceted aspirations and job satisfaction. In this way, firms can better use their human resource potential and improve innovation.
许红梅, 倪骁然, 刘亚楠. 上市企业员工满意度与创新——来自“中国年度最佳雇主100强”的经验证据[J]. 金融研究, 2021, 495(9): 170-187.
XU Hongmei, NI Xiaoran, LIU Yanan. Job Satisfaction and Firm Innovation: Evidence from “China's Best Employer Award 100” Winners. Journal of Financial Research, 2021, 495(9): 170-187.
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