The Effect of Temporary Employment on the Innovation Activity of Enterprises

Today, enterprises are widely spreading the practice of implementing and financing innovations. Data analysis shows that the number of enterprises that implement and Finance innovations shows steady growth. However, there is a problem that when businesses use tools such as fixed-term contracts and employee training, they can reduce the likelihood of innovation activity. The relationship of these indicators is considered in this paper. As part of the analysis, 1,317 companies operating in Russia were considered. Based on this sample, a regression analysis was performed by constructing a probit regression using instrumental variables to account for the potential problem of endogeneity between the probability of innovation activity and the proportion of employees who have completed training or have fixed-term contracts. The analysis showed that the share of employees with fixed-term contracts positively affects the probability of innovation activity (implemented, funded). The percentage of employees who have completed on-the-job training also has a positive impact. This result is explained by the low resource intensity in comparison with off-the-job training, which shows a negative impact on innovation activity.