Firm Innovation and Employment in South Africa: Examining the Role of Export Participation and Innovation Novelty

This paper studies the effects of process innovation and product innovation on firm-level employment in South Africa. We contribute through two novel extensions, analyzing how export status and the degree of novelty of innovation affect the innovation-employment relationship. We find process innovation to be more employment generating than product innovation. Furthermore, both process and product innovations have larger positive effects on employment growth for exporting firms relative to non-exporting firms. Finally, firms that introduce radical innovations that are new to the market, experience a higher positive employment effect than firms that introduce innovations that are new to only the firm.