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This paper contributes to the literature on non-monetary benefits of Vocational Education and Training (VET) by investigating its influence on a firm’s innovation process. While an increasing number of studies finds positive effects of VET on innovation in firms, the role that apprentices play in this mechanism has largely been unexplored. To analyze this role, we use the distinction between technological and organizational innovation, two complementary forms of innovation. When investigating the initiators of organizational innovation, to date, research has primarily focused on internal and external change agents at upper echelons. We conceptualize apprentices as hybrid (a combination of internal and external) change agents at lower echelons. We examine how apprentices in the Swiss VET system are key to integrating external knowledge (through school-based education) with internal knowledge (through on-the-job training) and moderating the influence of organizational innovation on technological innovation. Drawing on a sample of 1240 firms from a representative Swiss Innovation Survey, we show that apprentices leverage the positive association between innovations in a firm’s business processes and organization of work with incremental innovations. With the description of a new mechanism that shows the significant role of apprentices on firms’ technological innovation activities and evidence for supportive associations between key variables, we contribute to the understanding of the influence of VET on innovation in firms.

The literature on the economics of science and technology shows that academic universities—institutions focusing on basic research—positively affect innovation activities in regional economies. Less is known about the innovation effects of universities of applied sciences (UASs)—bachelor-granting three-year colleges teaching and conducting applied research. Furthermore, the evidence for positive innovation effects is predominantly based on average effects, while heterogeneity in innovation effects due to the economic environment is far less considered. By exploiting a public policy development in Switzerland that led to the quasi-random establishment of UASs, we investigate the regional heterogeneity in innovation effects of these UASs. We rely on patent and business census data and analyze the influence and importance of three economic preconditions—labor market size, labor market density and high tech intensity—on innovation effects of UASs. Our results show that only regions with a large or a dense enough labor market or with an above average high tech intensity experience significant innovation effects of UASs. Comparing the relative importance of the three economic preconditions, we find that labor market size is the most important factor that drives heterogeneity in innovation effects of UASs.

This study analyzes how worker pay is related to educational diversity, i.e., diversity in the educational composition of work groups in terms of the different types of vocational and academic education. As previous research shows that various types of diversity have positive effects in the workplace, a positive effect due to ‘educational diversity’ also seems plausible. We provide novel empirical evidence on the relation between the educational diversity of work groups and productivity, or more precisely, individual workers’ pay. Using theoretical considerations drawn from diversity research, we develop hypotheses on the relation between a group’s educational diversity and individual workers’ pay. Drawing on an exceptionally large set of employer-employee data with more than 87,000 employers and 1,200,000 employees, we test our hypotheses and find that the educational diversity of work groups—and thus work groups with workers of different types of vocational and academic education—is positively related to individual workers’ pay. Thus, educational diversity in the form of a combination of academic and Vocational Education and Training (VET) graduates in the workplace seems to be advantageous for the workers involved. Our findings suggest that educational diversity is especially beneficial in groups with high levels of task complexity and shorter organizational tenure.

Female leaders continue to face bias in the workplace compared to male leaders. When employees are evaluated differently because of who they are rather than how they perform, an ethical dilemma arises for leaders and organizations. Thus, bridging role congruity and social identity leadership theories, we propose that gender biases in leadership evaluations can be overcome by manipulating diversity at the team level. Across two multiple-source, multiple-wave, and randomized field experiments, we test whether team gender composition restores gender equity in leadership evaluations. In Study 1, we find that male leaders are rated as more prototypical in male-dominated groups, an advantage that is eliminated in gender-balanced groups. In Study 2, we replicate and extend this finding by showing that leader gender and team gender composition interact to predict trust in the leader via perceptions of leader prototypicality. The results show causal support for the social identity model of organizational leadership and a boundary condition of role congruity theory. Beyond moral arguments of fairness, our findings also show how, in the case of gender, team diversity can create a more level playing field for leaders. Finally, we outline the implications of our results for leaders, organizations, business ethics, and society.

Purpose - The purpose of this paper is to derive an empirical method to identify different types of training strategies of companies based on publicly available company data.Design methodology approach - Using a ten-year panel, the within-firm retention rate, defined as the average proportion of apprentices staying in a company in relation to all apprenticeship graduates of a company over several years, was analyzed. The within-firm retention rate is used to identify these companies' training strategies.Findings - It was shown that companies' motivation for apprenticeship training in Germany is not homogeneous: 19 percent of all companies follow a substitution strategy and 44 percent follow an investment strategy. The determinants of the substitution strategy were estimated and, for example, sizeable differences were found between sectors with different skill requirements and between firms' coverage of industrial relations.Research limitations implications - The method is well suited to classify substitution-motivated training firms but it is less precise in identifying the investment motivation. Moreover, very small firms which train only one apprentice need longer panel duration for precise results and therefore the classification results are less precise for very small firms.Practical implications - The classification can be used to identify determinants of company participation in apprenticeship training and to predict changes in demand for apprentices.Originality value - A simple and innovative method of identifying different types of training motivation with publicly available company data was derived, which has so far been possible only with very detailed company-specific apprenticeship surveys.

BackgroundBy applying the inventory theory to hiring skilled workers under uncertainty, the authors explain how firms decide on their optimum investment in an “inventory of skills.” This paper investigates the conditions under which firms are willing to make investments in a skilled workforce themselves rather than relying on skills produced within the education system or by other companies. By applying inventory theory to investments into apprenticeship training, the authors explain how firms decide on producing an optimum “inventory of skills” today to meet future demand. The authors derive hypotheses on how much firms are willing to invest in having a larger inventory of skilled workers depending on different types of inventory costs (overage costs, underage costs, demand structure).MethodsThe authors use data from the BIBB Cost–Benefit-Survey 2012/2013, which comprises detailed information on different costs and benefits of training investments from the firm’s perspective. The study applies a negative binomial estimation model.ResultsResults are threefold: firms are willing to invest in a larger inventory of skilled workers, i.e., to train more apprentices, first, if the costs of producing and retaining an excessive number of skilled workers (overage costs) are lower, second, if the costs of being short of skilled workers (underage costs) are higher, and third, given an identical cost structure, if it is more likely that the demand for skilled workers may be high in the future. Even more important is the relationship of the three: the combination of a firm’s critical ratio (underage costs in relation to overage costs) with its demand structure (industry volatility) is associated with a higher inventory of skills.ConclusionThe findings (particularly the relation of underage and overage costs, in combination with the demand structure) have important policy implications for firms’ incentives to invest in apprenticeship training.

Purpose - The purpose of this paper is to investigate the rates of return and the risks of different types of educational paths - all leading to a tertiary educational degree. The paper seeks to distinguish a purely academic educational path from a purely vocational path and a mixed path with loops through both systems.Design methodology approach - The paper studies the labor market outcome to compare earnings and calculate net return rates as well as risk measures to investigate whether different educational paths are characterized by different risk-return trade-offs. Entrepreneurs are separated from employees in order to examine whether for the same combination of education the labour market outcomes differ between the two groups.Findings - The empirical results are based on the Swiss Labor Force Survey (SLFS) and demonstrate that mixed educational paths are well rewarded in the labor market. However, for entrepreneurs a high return is also associated with a high income variance.Research limitations implications - The findings provide evidence for the existence of complementarities between vocational and academic education. Further research on mixed educational paths might provide more insight into this presumed relationship.Practical implications - Since the results indicate that mixed educational paths are a worthwhile strategy, the permeability of a national education system is a very important educational policy issue.Originality value - The study is innovative in three ways: first, it focuses on complete educational paths and not just the highest educational degree. Second, an alternative measure, the Baldwin rate of return, is used to assess the profitability attached to different educational paths. Third, the income risk associated with each educational path is calculated.

The literature on knowledge spillovers provides evidence that higher education institutions (HEIs) positively affect regional firm location (i.e., start-ups or firms located in a region). However, less is known about how HEIs in different fields of study impact regional firm location in different industries. To investigate this question, we exploit the establishment of universities of applied sciences (UASs)—bachelor’s degree-granting three-year HEIs in Switzerland. We find that the effects of UASs are heterogeneous across fields of study and industries. UASs specializing in “chemistry and the life sciences” and “business, management, and services” are the only UASs that positively affect regional firm location across several industries. Positive effects emerge in service industries characterized by radical service, incremental product, or process innovations. Thus, UASs are not a one-size-fits-all solution for increasing regional firm location. Instead, only UASs specializing in particular fields of study positively influence firm location in certain industries.Plain English SummaryUniversities of applied sciences (UASs) foster regional firm location but not for all fields of study or industries. Most gains stem from UASs in Chemistry & Life Sciences or Business, Management & Services and emerge mainly in service industries. UASs as knowledge suppliers provide regional firms as knowledge consumers with results of applied research and with human capital. However, positive effects on firm location only emerge if knowledge outputs of UASs as suppliers match knowledge needs of firms as consumers. Our study shows that good matches occured for UASs in Chemistry & Life Sciences or Business, Management & Services with service industries, which are typically characterized by radical service innovations and incremental product or process innovations. For policymakers who want to push regional innovation ecosystems, our findings imply that establishing UASs which promote these ecosystems requires careful consideration of regional firms’ knowledge needs. If UASs provide matching knowledge, UASs stimulate the regional innovation ecosystem and thereby firm location.

This paper applies Lazear’s skill-weights approach (2009) to analyze the specificity of skill combinations of various occupations and its effects on occupational mobility and wages. The results show that the more specific an occupation, the smaller the probability of an occupational change. We also identify clusters of occupations characterized by similar skill combinations and find that employees in specific occupations have a comparatively higher probability of changing occupations within a skill cluster than between skill clusters. Moreover, occupational mobility within a skill cluster results in wage gains, while between clusters it results in wage losses. Therefore, the acquired skill combination and the resulting skill cluster, rather than the occupation per se, crucially determines mobility. Thus, for educational policies, it is more important to study whether a skill cluster is sustainable than an occupation.

Central examinations-that is, centrally set and marked exams-have often been discussed as an instrument for improving educational outcomes. The aim of our study was to determine whether central exams have an impact not only on educational but also on labour market outcomes. We explain school quality choice through the incentives created by central exams vs. non-central exams and model the resulting students' schooling decisions and employers' wage decisions. We use the German Abitur and the variation among the German federal states with respect to central exams as a quasi-experimental design for alternative educational quality regimes. As hypothesised from our theoretical analysis, the percentage of Abitur holders increases more quickly in quality regimes without central exams than with central exams. However, as theoretically expected in the case of a pooled labour market, the wage premium decreases not only for Abitur-holders without central exams but also for all Abitur-holders. This is due to the quality deterioration in the states without central exams which spills over into a pooled labour market. Thus, graduates from states with central exams and higher educational standards 'pay' for the quality deterioration of educational standards in states without central exams.