The Impact of Innovation on Job Creation in Ghana. Is there a Gender Dimension?

Abstract

Using a panel dataset of 421 Ghanaian industrial and service enterprises from 2013 to 2015, this study empirically ascertains the effects of innovation on labour demand at the firm level. Due to reversal effects, the total impact of innovation on employment is unclear in theoretical contributions. Some are of the view that innovation has a possibility of destroying jobs due to its immediate direct labour-saving nature. Others argue that several compensating mechanisms cancel out the primary effect of innovation, leaving the subsequent effect unclear (Twumasi Baffour et al. 2019). Innovation is thought to substantially affect job creation in either case. Additionally, the link between gender and the innovative behaviour of organizations has received more attention from researchers and policymakers in recent years, although the empirical results are still not definitive. There is a wealth of literature on the subject of how impactful innovation has been on job creation. This study will add to this body of literature by considering whether or not there is a gender dimension to it. A panel fixed effect model is used to explore how innovation in product and process influences employment at the firm level. The Hausman-Taylor estimator with the random effect model is also used as a robustness check as a majority of the significant variables are time-invariant and there is a suspicion of endogeneity. The probit regression model is implored to determine whether the gender of firm ownership has any bearing on the creative behaviour of the firm. The Fixed effect first difference regression model for Change in employment is used to determine whether additional jobs were created over the years under consideration. The results indicate that innovation in product and process has no significant impact on the creation of new jobs. Other outcomes demonstrate that product innovation affects employment significantly. As opposed to that, the link between process innovation and employment level is not immediately apparent. Additionally, male-owned manufacturing firms that engage in innovation positively and significantly impact employment levels. However, there is an inverse relationship between employment levels and female-owned product innovative firms. For small, medium, and large businesses, process innovation in large businesses owned by males had a positive impact on employment levels, whereas, in large businesses owned by women, there is an inverse correlation between process innovation and demand for labour. Due to the gender-neutral nature of innovation in Ghanaian manufacturing and service businesses, the findings of the probit regression model indicated that gender had no statistically significant impact on firms' innovative behaviour.