Research Report

Do more inclusive workplaces lead to more innovation? Evidence from survey data for firms in England

ERC Research report

Author

ERC


Although the productivity benefits of more inclusive and diverse workplaces have been widely discussed, there is less evidence on the links between inclusivity and innovation. In this report, drawing on pre-existing data for a large sample of firms across the East and West Midlands of England, we consider three research questions:

  • Is workforce diversity positively related to innovation outcomes?
  • How do high performance work practices, such as job variety, flexibility, and communication, contribute to innovation outcomes; and,
  • How do workplace practices to support good mental health and well-being among employees contribute to innovation

Our results suggest that building a more inclusive workplace is strongly associated with higher levels of innovation activity. Based on Probit and treatment effects models, our analysis suggests three key results:

  • Greater workforce diversity in terms of gender, ethnicity and disability is positively associated with an increase in the propensity to undertake product and process innovation;
  • Providing flexible working is positively associated with an increase in the propensity to undertake product innovation;
  • Taking measures to support employee mental health and well-being are strongly associated with both product and process innovation.

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