Title: The role of employee relations in driving innovation: moderating effects of firm size and slack resources

Authors: Gun Jea Yu

Addresses: College of Business Administration, Hongik University, 72-1 Sangsu-Dong, Mapo-Gu, Seoul, Korea

Abstract: Employee relations have been examined as one of the drivers of innovation. The environments surrounding firms are becoming increasingly complex and ambiguous, making it much harder for firms to minimise agency problems and set desirable behaviours for innovation. Therefore, the objective of this study was to investigate the relationship between employee relations and innovation using Kinder, Lydenberg, and Domini (KLD), Compustat, and US patent data. The results showed that employee relations were positively associated with innovation. In addition, this association became stronger for larger firms and those with more slack resources. These results suggest that employee relations represent an important factor that encourages innovation. Thus, to be innovative, large firms with more slack resources need to build good employee relations in a more active manner.

Keywords: employee relations; innovation; exploration and exploitation; slack resources.

DOI: 10.1504/IJBPM.2026.152312

International Journal of Business Performance Management, 2026 Vol.27 No.2, pp.235 - 245

Received: 26 Apr 2023
Accepted: 25 May 2024
Published online: 16 Mar 2026 *

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