Analyzing a sample of German firms, our Probit analysis shows that conflictual Anglo-Saxon type labor–management relationships are negatively related to the probability of performing R&D and to introduce innovations. We add to the Varieties of Capitalism literature a number of arguments of why cooperative Rhineland labor relations are superior in handling the ‘routine’ innovation model in knowledge-intensive industries. Notably if innovative competences are based on the stepwise accumulation over long periods of bits and pieces of knowledge for the continuous improvement of products, processes or systems, cooperative Rhineland labor relations appear to be superior to conflictual Anglo-Saxon labor relations.

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Keywords Labor relations and innovation, Liberal and Coordinated Market Economies, supply side labor market reforms
JEL Human Capital; Skills; Occupational Choice; Labor Productivity (jel J24), Labor Management Relations; Industrial Jurisprudence (jel J53), Labor Management (team formation, worker empowerment, job design, tasks and authority, job satisfaction) (jel M54), Innovation and Invention: Processes and Incentives (jel O31)
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Journal Review of Social Economy
Hoxha, S. (Sergei), & Kleinknecht, A. (2019). Do trustful labor–management relations enhance innovation? Evidence from German WSI data. Review of Social Economy. doi:10.1080/00346764.2019.1662936