Vocational Education and Innovation Interdependecies

Firms innovate in different ways. One classification of innovation types distinguishes between technological and organizational innovation. Technological innovation, dominating the innovation literature, comprises the development of new or the improvement of existing products and processes. In contrast organizational innovation refers to new ways of organizing that affect a firm's structure, processes, or practices. Although technological and organizational innovations have distinct underlying concepts, the innovation literature increasingly argues for interdependencies among these two innovation types. Already in 1996 Nelson notes that "new ways of organization are required to guide and support technological advances to enable firms to profit from them." Lam (2005) reverses the argument stating that "technological innovation triggers organizational change because it shifts the competitive environment". Recent empirical studies provide strong evidence for the important interdependencies between technological and organizational innovations, corroborating the benefits for those firms that combine technological with organizational innovation.

We argue that firms require different knowledge to generate either technological or non-technological innovations. A firms’ workforce carries the technological knowledge and knowledge on the efficient organization of work. A specific form of education, dual-track vocational education and training (VET), integrates theoretical knowledge and its practical application. Training in dual-track VET takes place in vocational schools and firms and is regulated by a standardized curriculum that is updated frequently in a joint effort of employer, employee and governmental organizations. We hypothesize that firms by participating in dual-track VET are better able to integrate technological and organizational innovations in the training process.

We analyze 1659 firms from the Innovation Survey of the Swiss Economic Institute (KOF) using regression analysis. The Swiss educational system offers firms academic and vocational knowledge at different levels and is therefore an ideal setting for the investigation of innovation interdependencies. Preliminary results strong interdependencies between technological and organizational innovation, in line with recent findings in the literature. Additionally, we find that this interdependency is moderated by firms’ participation in VET as the moderation between organizational innovation and VET shows a highly significant coefficient that exceeds twice the size of the organizational innovation main effect. Thus, our preliminary results confirm our hypothesis and provide new insights into these innovation interdependencies.

Our study carries important managerial and policy-making implications. Managers may consider to begin participating or to expand their participation in the VET if they consider innovation an important driver of their firm's performance. Yet, given that VET participation at the same time binds important firm resources, the benefits of VET induced innovation need to be put into perspective. Additionally, the VET system is institutionalized in a multitude of forms in different locations. Managers may on the one hand lobby for policy support in the development of a modern VET system, and our finding for the contributing role of VET to innovation should provide incentives for policy-makers to develop the VET system. On the other hand, absent a viable VET system, the positive effects of innovation of this particular knowledge source might be substitutable by alternative sources.