Industrial relations and firm-level innovation: A comparative analysis of establishment data in Germany and Italy

A large body of research has investigated the impact of industrial relations on workplace innovation. Econometric research based on U.S. data suggests that unions are detrimental to innovation, while evidence from Europe is more mixed. This points to the importance of 'contextualized' theorizing about the effects of industrial relations on firm-level innovation. Such an approach is common in qualitative research but is infrequently seen in quantitative studies. To address this gap, our article investigates the link between industrial relations and innovation at the firm level using establishment-level surveys from Germany (IAB establishment data) and Italy (INAPP-RIL establishment data). Our findings point to significant cross-country differences in how industrial relations institutions, including workplace representation and firm/sectoral agreements, can influence firm-level innovation. This cross-country variation underscores that similar institutions may serve different functions depending on the specificities of the national context.