Does Innovation Create Employment Indirectly through the Improvement Generated in the Company’s Economic and Financial Results?

Abstract

Innovation has traditionally been related to unemployment because people are replaced by machines. By analyzing the different approaches in the literature, we focused on the relationship between innovation and employment with the aim of exploring whether the most innovative companies create more employment, or hope to create it, taking into account the company performance. For this purpose, we performed multivariate analysis, using the partials least squares (PLS) technique, to study the direct and indirect relationship between business innovation and employment through the economic and financial performance of the company, focusing on Spanish companies in the year 2022. The results obtained show that innovation has a positive effect on employment and on the performance of the company, and thus on the creation of employment. In conclusion, the administration should encourage business innovation to improve employment rates and company performance.