Makó Csaba, Professor, Insitute of Sociology, Hungarian Academy of Sciences, Budapest: This email address is being protected from spambots. You need JavaScript enabled to view it..
Illéssy Miklós, Insitute of Sociology, Hungarian Academy of Sciences, Budapest.
Csizmadia Péter, Insitute of Sociology, Hungarian Academy of Sciences, Budapest.


In this paper the authors intend to examine the innovaton performance of the Hungarian frms before and following the period of the global fnancial crisis and economic downturn. Contrary to the mainstream approach non-technological innovaton, more precisely workplace innovaton is put into the focus of the analysis. The authors argue that this is a neglected dimension of frms’ innovaton actvites which may become an important source of compettveness at company level and thus it deserves more atenton. The analysis of empirical data of the various waves of the European Community Innovaton Survey (CIS) on non-technological innovaton shows that the innovaton performance of the Hungarian frms is declining. The authors complement this statstcal analysis with the results of the European Working Conditons Survey demonstratng that there are signifcant differences in the innovaton performance of such country groups as the EU-27, the Nordic and the Post-Socialist countries. Beside the country-specifc comparison, the authors evaluate the performance of the Hungarian and Slovakian knowledge-intensive business service sector identfed as a driver playing a “benchmark” role in speeding up workplace innovatons. Finally, some key lessons are drawn indicatng the need for a map on the distributon of different work organizaton forms in order to beter understand the companies’ innovaton actvity and skill requirements.

Keywords: workplace innovaton, knowledge-intensive business sector, Hungary, Slovakia.


In the last decade, innovaton has become not only one of the most generally used “buzzword” or a “new hype” of policy makers in the developed countries, but there is a growing consent in the business and academic community that technological and non-technological innovatons have a crucial role in a country’s sustainable compettveness and in creatng new paths for economic development. The mainstream accounts of innovaton deal predominantly with technological (product or process) innovaton, neglectng the role and impacts of organisatonal innovaton or socio-cultural changes as well as the social, cultural, psychological acceptance of new working practces and adaptaton to them. This oversight is not just a feature of the Hungarian but also the European research and practce on innovaton.

According to the European Compettveness Report, the productvity growth advantage of the US over Europe is not just the consequence of higher standards of technological innovaton. US companies are also at the forefront in terms of new organisatonal and management methods and governance. New business models, innovatve supply methods, etc. play a key role in the introducton of technological innovatons to new markets and in supportng entrepreneurship. Innovatons referred to as non-technological (social-insttutonal) represent the “missing link” that hinders European companies in their exploitaton of opportunites offered by new technologies and European integraton. In this relaton it is worth notng the decisive role of the workplace that is strongly influenced by the existng managerial and organisatonal practces. However, “The botleneck in improving innovaton capabilites of European frms might not lie in the low levels of R&D expenditure, which are strongly determined by industry structures and therefore difcult to change, but the widespread existence of working environments that unable to provide fertle environment for innovaton.” (Arundel et. al. 2006, cited by Alasoini, 2011b: 13).

Within the European countries we may identfy visible differences in the distributon of such organisatonal forms or models that facilitate or constrain innovaton or learning capabilites of frms. According to the 2005 data from the European Working Conditons Survey (EWCS), in comparison to the EU average, the Post-Socialist countries where work organisatons with the greatest innovaton and learning potental can be found are Estonia and Hungary. These two countries outperform other Post-Socialist member states. Unfortunately, however, Taylorism/ Fordism – the work organisaton of mass producton which has the lowest learning and innovaton capability – also has a strong presence in these countries. The Hungarian economy, therefore, is characterised by a dual (asymmetric) model of work organisaton: front-runner companies (even measured by internatonal standards) and companies with very restricted innovaton and learning potental coexist. Putng into the context of the EU-27 countries, the following six contrastng country profles can be distnguished globally, according to the dominant model of work organisaton[1]:

  • The Scandinavian countries of Denmark and Sweden, as well as the Netherlands: the discretonary learning forms of work organisaton having high innovaton capabilites predominate.
  • The Anglo-Saxon countries (Ireland and the UK), some Eastern European countries (Estonia, Latvia, Poland and Slovenia), Finland, Luxemburg and Malta: characterised by a relatvely high development of lean producton work organisaton forms. The discretonary learning forms are also slightly overrepresented in Finland, Luxemburg and Malta.
  • Portugal and Romania: overrepresentaton of lean producton and Taylorist work organisaton forms
  • Bulgaria and Slovakia: the Taylorist forms of work organisaton are rather widely diffused.
  • Certain Mediterranean countries (Cyprus, Greece and Spain) and some Eastern European countries (Czech Republic and Lithuania): an overrepresentaton of the Taylorist and traditonal or simple structure forms of work organisaton.
  • Most Contnental countries (Austria, Belgium, France and Germany): a less contrastng distributon of the different forms of work organisaton and a slight overrepresentaton of the discretonary learning forms. A midpoint situaton is also observed in Hungary and Italy.

This model is aligned with the fndings of other research results demonstratng that foreign companies and frms with mixed ownership are at the forefront of both technological and non-technological innovaton. These frms emerge like cathedrals in the Hungarian economy. At the same tme, fully Hungarian owned enterprises (primarily micro, small and medium-sized) pursue innovaton actvites of signifcantly less intensity (Dallago, 2010; Szerb, 2010; Chikán, Czakó, Kazainé, 2006). Table 1. highlights the relaton between frms’ ownership and innovaton performance.

Table 1. Ownership and Innovaton Actvity of Firms in the Hungarian Economy: 1999 – 2005*
Ownership structureShare of innovatve frms
Innovatve firmsNon-innovatve frms
100% Hungarian ownership 13.4% 17.3% 84.9% 82.7%
Mixed- ownership 31.5% 30.5% 65.8% 69.5%
100% foreign ownership 17.6% 30.1% 78.5% 69.9%
*Technological “product” and “process” (TPP) innovaton
**Iwasaki, I. (2004), 111. o.
*** Calculaton of Szunyogh Zsuzsa (Central Statstcal Ofce, - KSH).
Source: (Makó, Illéssy, Csizmadia, 2008. p. 1076).

Unfortunately, a great majority of the Hungarian innovaton research focuses on the diffusion of the technological product and process (TPP) innovatons in the manufacturing sector. We already argued that non-technological innovatons also play a very important factor in a country’s compettveness. In additon, from the turn of the century, we assist a historical shif from the manufacturing to the service economy in the developed countries of Europe, Asia and America. This shif is well reflected by the share of the economic sectors in the structure of employment. Therefore there is a growing need to address the importance of non-technological innovaton: “Informaton and communicaton technologies (ICT) sometmes presented as a phenomena that can completely replace human competence and interacton, through expert systems and internet connecton. The belief in this myth has proven costly for frms and public authorites. All systematc empirical and historical research shows that an acceleraton in the diffusion of a radically new technology results in more harm than benefts if it is not combined with new insttutons, new modes of organizaton and new human competence.” (Lundvall, 2002:5).

The structure of the paper is organised as follows: the frst secton gives a brief overview of the organisatonal surveys carried out mainly on an internatonal level that are useful for cross-country comparisons. The second secton focuses on the theoretcal foundaton (OSLO Manuals) and measuring tools of non-technological innovatons used in the various waves of the employer-oriented Community Innovaton Survey (CIS) and presents Hungarian results on the diffusion of organisatonal innovaton. This will be complemented with the experiences of the employee-focused European Working Conditon Survey (EWCS). The fnal secton discusses some critcs of the concept of innovaton adopted by the CIS and raises some issues for future research of social and organisatonal innovatons.

Benchmarking Exercise of the Organisatonal Surveys: European and Natonal Perspectve

Although organisatonal innovaton is quite a new phenomenon in the statstcal data collecton on a European level, the frst systematc analysis of the organisatonal surveys was elaborated by Benjamin Coriat[2]. Coriat distnguishes three groups of organisatonal surveys:

  1. Seeking for some forms of division of labour and task coordinaton identfed as representatve forms of innovatve working arrangements (e.g. teamwork, justin-tme, quality circles, etc.). This is typical of German questonnaires.
  2. Seeking for organisatonal traits reflectng that the frm surveyed is innovatve, i.e. it is capable of dynamically adjustng to the demands of the changing environment (intra-organisatonal and inter-organisatonal co-ordinaton methods). This is the case in Danish questonnaires.
  3. A mixture of the two former groups (Britsh and French cases).

The interpretaton of data gathered by organisatonal surveys is a core issue. In relaton to the methodology and the indicators used, Coriat raises four main problems:

  1. The questons are mostly too general and thus the answers are too vague. How to interpret and compare, for example, the introducton of teamwork in a Swedish and in a Japanese working environment? “In the same way, it is also impossible to have any idea about the nature and contents of the learning processes that take place within working teams, since they largely vary according to how those teams are coordinated, about the levels of the tasks and responsibilites those teams are entrusted with, and about the way they are inter-related and their relatonships with their hierarchies.” (ib. id. p. 3.)
  2. The mere existence of some organisatonal forms or practces does not permit to conclude that it works in an innovatve way.
  3. This leads us to the problem of defning organisatonal innovaton and organisatonal change. The majority of the surveys detect only the later without saying anything on the innovatve characteristcs, if any, of these organisatonal changes. “Indeed, the existence of such a process within a frm clearly testfes to changing organizatonal paterns, but nothing can be asserted as to the nature and orientaton of those changes, or the new organizatonal paterns or traits themselves.” (ib. id. p. 4.)
  4. Level of novelty: in the surveys it is only possible to measure already well-known and codifed working practces but it is impossible to measure the radically new ones, unidentfed by literature. This calls atenton to the importance of such qualitatve research methods as, for example, company case studies.

As it can be seen, different surveys work with different (although) implicit notons of organisatonal innovaton. Is it possible to give one sole and explicit defniton of organisatonal innovaton? According to Coriat, it is difcult to defne organisatonal innovaton because of its “multdimensional character” and thus it can only be identfed as a “joint group of atributes”. This relates to the abovementoned categorisaton of surveys aimed to measure organisatonal innovaton: paterns of division of labour, specifcity of coordinaton or a combinaton of these two. As Coriat puts it: “ …if we consider that organizatonal innovaton consists of a cluster of changes affectng the labour division and coordinaton paterns that prevail within a given organizaton (or between several organizatons), these very paterns possessing a triple dimension (informaton, knowledge and know-how, interests)[3], we then understand what each one of the implicit concepts of organizatonal innovaton captures, and the difculty to interpret the result of the confrontaton of the informaton delivered by each one.” (ib. id. p.6.)

According to Coriat, organisatonal surveys inform us on the presence or absence of these working arrangements and thus on the potental of any organisatonal innovaton but the real content of these changes remain hidden. The analysis of different questonnaires does not give a defnitve answer to the queston of the difference between organisatonal change and organisatonal innovaton. Britsh surveys are agnostc as for the directon of organisatonal change and consequently any organisatonal change is considered as innovaton. In contrast, Danish surveys implicitly suppose that organisatonal change can only be innovatve if it leads to more flexibility (defned as “the dynamic capacity to adjust to changing environments”, ib. id. p. 3.).

More recently, Ramioul and Huys made an inventory of the most signifcant organisatonal surveys of European countries, where the following selecton principles were identfed (Ramioul & Huys, 2007: 6):

  1. possibility to measure a wide range of topics covered by the organisatonal changes (e.g. innovaton, working and employment conditons, labour relatons, etc.);
  2. scope: the organisatonal survey must cover a wide range of sectors, preferably the structure of the whole economy;
  3. periodicity: the organisatonal surveys must be carried out in several waves over years applying the same or similar questons.

In the framework of a recent internatonal project aimed to collect and interpret informaton on the process of organisatonal changes in the last two decades, twenty organisatonal surveys were carried out covering the selecton principles presented above. These organisatonal surveys were carried out both on internatonal and natonal level, and were characterised by a variety of methodological designs. In this respect the following four signifcant methodological orientatons should be distnguished (Meadow, 2010: 10):

  1. Employer-focused survey,
  2. Employee-focused survey,
  3. Employer /employees survey (employer is sampled frst - linked survey),
  4. Employee/employer survey (employee is sampled frst).
Table 2. A Set of Possible Survey Designs (Meadow, 2010: 48)
Methodological orientaton of the surveyTime dimensionExample of existng surveys
Employer only Cross secton* CIS (Community Innovaton Survey), ECS (European Company Survey), ESWT (Establishment Survey on Working Time and Work-Life Balance), EMS (European Manufacturing Survey).
Panel opton** DISKO (Danish Innovaton System: Comparatve analysis), OSA Er (Labour demand panel – Arbeidsvraagpanel – The Netherlands), NUTEK (Technological and Organisatonal Change and Labour Demand (Sweden), PASO (Panel Survey of Organisatons (Flanders)
Employee only Cross secton EWCS (European Working Conditons Survey), ESS (European Social Survey), BSS (Britsh Skills Survey)
Panel option NWCS (Netherlands Working Conditons Survey, OSA Ee (OSA Labour supply panel – Arbeidsaanbodpanel),
Linked employer/ employee (or employer frst approach) Cross secton COI (Changements Organisatonels et Informatsaton, France), ESES (European Union Structure of Earnings Survey), MOA (The MOA method for assessment of Organisaton – Sweden), TNO/WIS (TNO Work in the Informaton Society survey – the Netherlands),
Panel opton LIAB (Insttute für Arbeits- und Berufsforschung – IAB-Germany), RESPONSE (Relatons professionnelles et negotatons d’entrepriseFrance), WES (Workplace and Employee Survey – Canada), WERS (Workplace Employment Relatons Survey – UK)***
Linked employee/ employer (or employer frst approach) Cross secton AES-CVTS (Adult Educaton Survey – Contnuing Vocatonal Training Survey – France), EFE (Enquete famille employeurs – France), NOS (Natonal Organizaton Study – USA).
Panel opton -
*Cross secton survey: measuring change by retrospectve questons.
** Panel survey: measuring change through repeated measurements.
*** The methodology of the frst Hungarian Employment Survey (2010) adopted the approach of the Britsh WERS (Workplace Employment Relaton Survey), carried out in the following waves: 1980, 1984, 1990, 1998 and 2004. (See in detail: htp:// The highlighted surveys are cross-natonal, NOS and WES are natonal (North America), PASO is regional (Flemish region) and the other surveys are natonal (European countries).

Table 3 classifes the seven European organisatonal surveys from the total twenty one (internatonal & natonal) according to their acronym, name, last wave of survey and producer / sponsor.

Table 3. Main Characteristcs of the European Organisaton Surveys (Meadow, 2010: 91- 92)
AcronymName of the surveyLast waveCountries coveredProducer/sponsor
CIS (employer)Community Innovaton SurveyCIS- 2010EU-27, Iceland, Norway and TurkeyEurostat
ECS (employer European Company Survey 2009 EU-27 + Croata, Turkey and Former Yugoslav Republic of Macedonia (FYROM) European Foundaton for the Improvement of Living and Working Conditons (EFLWC)
AcronymName of the surveyLast waveCountries coveredProducer/sponsor
EMS (employer) European Manufacturing Survey 2006 Germany, Austria, Croata, France, UK, Italy, Slovenia, Turkey, Greece, Netherlands and Spain. Coordinator: Fraunhofer Insttute of Systems and Innovaton Research (ISI)
ESES (linked employer/ employee European Union Structure of Earnings Survey 2006 EU-27 + Iceland and Norway Eurostat
ESS (persons over 15 years old in private households) European Social Survey 2006 /2007 32 countries, including 22 EU countries Coordinator: City University, UK., University Leuven, Belgium, NSD, Norway, ZUMA Germany, ESADE, Spain, Netherlands Sponsored by the European Commission and the European Science Foundaton
ESWT (employer) Establishment Survey on Working Time and Work-Life Balance 2010 EU-15 and Czech Republic, Cyprus, Hungary, Latvia, Poland, Slovenia European Foundaton for the Improvement of Living and Working Conditons (EFILWC)
EWCS (employee)European Working Conditons Survey2010EU-27 + Croata, Turkey, Switzerland and NorwayEuropean Foundaton for the Improvement of Living and Working Conditons (EFILWC)

Comparing the design and structure of the surveys presented in Table 3. above, we may distnguish two forms of co-ordinaton. In the frst case, the survey is designed and implemented centrally (e.g. the European Working Conditons Surveys). In the second case, the survey is carried out in a decentralised way. For example, the 2004 decree of the European Commission (1450/2004/EC) is an obligatory regulaton for member states to carry out the Community Innovaton Survey. Eurostat is responsible for the co-ordinaton of surveys in close co-operaton with the Natonal Statstcal Ofces that are responsible for the natonal design, feldwork and data analysis in every four or two (light surveys) years.

The next secton presents the brief history of the European innovaton statstcs with a special focus on the elaboraton of questons aimed to measure various dimensions of organisatonal innovaton. Besides mapping organisatonal innovaton related questons of the CIS, this secton will give a brief overview on the importance of organisatonal innovatons of the Hungarian frms partcipatng in several waves of the survey. Due to the fact that the CIS is an employer-oriented survey, we use empirical experiences from an employee-oriented survey. For this purpose, results of the various waves of the European Working Conditons Surveys (EWCS) on the learning and innovatve character of the work organisaton of Hungarian frms will be presented through an internatonal comparison.

Atempts to Measure Organisatonal Innovaton: Case of the European Innovaton Survey (CIS)

From Narrow to the Broadening Views of Innovaton

Building on the innovaton theory of Schumpeter (1950, 1966) and stressing his socalled Mark II. period on the importance of co-operaton and collectve efforts in producing innovaton (in contrast to the key role of the individual entrepreneurs (Mark I. period), we may assert the outcomes of innovaton research “….that a frm does not innovate in isolaton but depends on extensive interacton with its environment. Various concepts have been introduced to enhance our understanding of this phenomenon, most of them including the terms “system” or the somewhat less ambitous “network” (Fagerberg, 2006: 20). In recent years, the broadening view of innovaton is characterising public thinking and innovaton has become one of the most extensively used “catch-words” even among policy makers. For example, the Finnish natonal innovaton strategy elaborated half a decade ago (2008), “… is based on the idea that the focus of innovaton policy should be shifed increasingly to demand and user-driven innovatons and the promoton of non-technological innovatons” (Alasoini, 2011a: 23-24). Besides such features of innovaton as radical versus incremental, product versus process, open or disruptve, social and organisatonal innovaton, etc., we intend to stress those theoretcal concepts that queston the validity of unidirectonal approaches where innovaton is shaped by one single group of factors (e.g. “science push” or “demand pull” views of innovaton). In this perspectve, not only the “locus” of innovaton is changing (e.g. increasing role of clients/customers, suppliers, growing importance of environmental protecton, shif from manufacturing to service sector, etc.) but the “focus” too. In this relaton, we share the following statement: “… when we think about the changing focus of innovaton, the issue is less one of a move away from conventonal technological innovaton to a much more thorough understanding of how technological and social change are both required for service innovaton. This itself requires some rethinking of management practce and policy development; but such a shif in focus is required if the objectves of innovaton efforts are to be focused more on meetng Grand Challenges” (Basset, Miles, Thénint, 2011: 5).

One of the most important “Grand Challenges” is the historical shif from manufacturing to the service economy. From the last decades of the 20thcentury, we have assisted an unprecedented growth of the service sector at the expense of the manufacturing and agricultural sectors. Some service sector scholars call this radical shif in the economic actvites the “service sector revoluton”. In the developed countries this sector produces 70-80% of GDP, while in the Post-Socialist countries of Central and Eastern Europe the share of service sector ranges from 58.4% to 62.9%. It is worth mentoning that in the case of Hungary between 1992 and 2006, the productvity growth in the service sector (measured by the share of the gross value added/capital) was higher than in the manufacturing sector. In additon, the service sector played a crucial role in employment generaton too. Between 1995 and 2006 every second new job (46%) was created in the service sector and, interestngly enough, more than every second new job (57%) was established in the KnowledgeIntensive Business Services (KIBS). (Makó, Csizmadia, Illéssy, Iwasaki, Szanyi, 2011.)

This radical change in the economic structure raises the methodological problem of how to measure innovaton in this sector. Some groups of scholars stress the difference between innovaton realised in the manufacturing and in the service sectors. On the contrary, others tend to apply methods and knowledge accumulated on innovaton in the manufacturing sector to the service sector: this is the so-called assimilaton view. However, the boundaries between the two sectors have been diminishing and “a newly proposed synthesis approach” (Miles, Boden, 2000) argues that studies conducted on service sector innovaton are capable of broadening our understanding of innovaton that is currently shaped by the traditonal focus on manufacturing innovaton. (Beyhan, et. al. 2009: 4). One of the most important lessons learned from this debate is that besides the discussion on how to improve statstcal tools and other metrics, we have to repositon our interest to beter understand the features of non-technological innovaton, in spite of the fact that “this may not rely on conventonal R&D, nor be manifest in new ideas that can be protected by the patent measures”. (Basset, Miles, Thénint, 2011: 9).

Adoptng the broadest view of organisatonal innovaton according to which “… the term ‘organisatonal innovaton’ refers to the creaton or adopton of an idea or behaviour new to the organisaton” (Lam, 2005: 115), we intend to analyse the theoretcal foundatons and empirical experiences of the development of statstcal methods measuring organisatonal innovaton on a European level. For this purpose, the next secton focuses on changes in the guidelines of the Oslo Manual on various forms of innovaton, with special atenton to the organisatonal ones and their measurement in the various waves of the Community Innovaton Survey (CIS) from 1993 untl today. As the CIS is an employer-oriented survey, we intend to complete its results with the experiences of the employee-oriented European Working Conditon Survey (EWCS).

Designing Questons to Measure Organisatonal Innovaton: The Experiences of the European Community Innovaton Survey (CIS)

From the end of the Second World War untl the end of the 1970’s, internatonal surveys focused exclusively on data collecton of the well-known Research and Development (R&D) actvites. It required more than a decade of preparaton co-ordinated by the OECD and empirical experiences learned from the pilot studies carried out mainly in the Nordic countries, before the frst editon of the so-called Oslo Manual was published in 1992. This manual became the theoretcal and methodological foundaton of the European Community Innovaton Survey (CIS). Untl now, six waves of the CIS have been prepared. Table 4. summarises the most important characteristcs of these surveys.

Table 4. History of the CIS and Organisatonal Innovaton (Arundel, 2010:1)
SurveySurvey yearReference date*Organisatonal innovaton questons
CIS-1 1993 1990 - 1992 None
CIS-2 1997 1994 - 1996 None
CIS-3 2001 1998 - 2000 Whether the enterprise introduced a new or signifcantly changed:
  1. Corporate strategy
  2. Advanced management technique
  3. Organisatonal structure
CIS-4 2005 2002 - 2004 Whether the enterprise introduced a new or signifcantly changed:
  1. Knowledge management system
  2. Change to the organisaton of work
  3. Change to relatons with other frms
Four types of effects of organisatonal innovaton:
  1. Reduced tme to respond to customer needs
  2. Improved quality of goods or services
  3. Reduced costs per unit output
  4. Improved employee satsfacton
CIS 2006 2007 2004 - 2006 New questons tested in an extended version of the CIS- 2006, a pilot survey version, utlising face-toface interviews.
CIS 2008 2009 2006 - 2008 Identcal questons as in the CIS-6.
* Questons refer to organisatonal innovatons introduced during this tme period.

In relaton to the waves of the CIS, Arundel (2010: 2) indicated that in spite of the fact that the CIS-2006 adopted the same questonnaire that was used in the CIS-4, several additonal questons were tested: “who developed” organisatonal innovaton, the type of organisatonal innovaton (new business practces) and the “effects” of innovaton (improved communicaton or informaton sharing). It is worth notng that in the case of the CIS survey the Central Statstcal Ofce of each partcipatng country has to prepare the so-called Quality Report for the country concerned.

The frst editon of the Oslo Manual dealt mainly with the technological product and process (TPP) innovatons in the manufacturing sector. These measurement tools were not designed to evaluate and map service sector innovaton despite of the fast growing importance of this economic sector. The Oslo Manual (1992) served as a guideline for such large scale surveys as the CIS aimed to measure factors shaping both innovaton and their impacts. The second editon of the Oslo Manual (1997) provided guidelines for both manufacturing and service sector actvites. Unfortunately, the TTP approach used in this version of the Manual could not properly measure the partcular characters of the service sector. It was only the third editon of the Oslo Manual (2005) that aimed to measure not only TPP innovaton but marketng and organisatonal innovaton as well. An innovaton, according to this version of the Oslo Manual “… is the implementaton of a new or signifcantly improved product (goods or services), or process, a new marketng method, or a new organisatonal method in business practces, workplace organisaton or external relatons.” (Oslo Manual, 2005: 46). The four types of innovatons are the following (Oslo Manual, 2005: 46-51):

  1. A product innovaton is the introducton of goods or services that are new or signifcantly improved with respect to their characteristcs or intended use. This includes signifcant improvements in technical specifcatons, components and materials, incorporated sofware, user-friendliness or other functonal characteristcs.
  2. A process innovaton is the implementaton of new or signifcantly improved producton or delivery methods. This includes signifcant changes in techniques, equipment and sofware.
  3. A marketng innovaton is the implementaton of a new marketng method involving signifcant changes in product design or packaging, product placement, product promoton or pricing.
  4. An organisatonal innovaton is the implementaton of a new organisatonal method in the frms’ business practces, workplace organisaton or external relatons.

Due to the core interest of the present study, in the following secton we intend to focus on the questons designed to identfy the various forms of organisatonal innovatons and their impacts. For illustratve purposes, we choose the latest wave of the CIS-10 (covering the period of 2008-2010) in which the following questons measured organisatonal innovaton.

Q9. Organisatonal Innovaton

An organisatonal innovaton is a new organisatonal method in your enterprise’s business practces (including knowledge management), workplace organisaton or external relatons that has not been previously used by your enterprise.

  • It must be the result of strategic decisions taken by management.
  • Exclude mergers or acquisitons, even if for the frst tme.

Q. 9.1 During the three years from 2008 to 2010, did your enterprise introduce:

  Yes No
New business practces for organising procedures (i.e. supply chain management, business re-engineering, knowledge management, lean producton, quality management, etc.)
New methods of organising worker responsibilites and decision making (i.e. frst use of a new system of employee responsibilites, team work, decentralisaton, integraton or de-integraton of departments, educaton/training systems, etc.)
New methods of organising external relatons with other frms or public insttutons (i.e. frst use of alliances, partnerships, outsourcing or subcontractng, etc.)

Q. 9.2 How important were each of the following objectves for your enterprise’s organisatonal innovatons introduced during the three years from 2008 to 2010 inclusive?

If your enterprise introduced several organisatonal innovatons, make an overall evaluaton

  High Medium Low Not relevant
Reduce tme to respond to customer or supplier needs
Improve ability to develop new products or processes
Improve quality of your goods or services
Reduce costs per unit output
Improve communicaton or informaton sharing within your enterprise or with other enterprises or insttutons

Following a historical overview of the waves of the CIS and a revision of the questons elaborated with the aim to identfy both the forms and the effects of organisatonal innovatons, some empirical data on trends will be presented related to innovaton in the Hungarian economy. Table 3. indicated that the CIS survey was an employer-oriented type of survey, therefore it would be benefcial to complete the empirical experiences of the CIS with an employee-oriented type of survey. In order to do so, we will use the results of the European Working Conditons Survey (EWCS). In the next secton, combining the empirical informaton collected from both employers and employees, we may get a more balanced view on the trends and intensity of organisatonal innovaton of frms operatng in Hungary[4].

Organisatonal Innovaton in the Hungarian Context: Some Lessons from the CIS and the EWCS

By analysing the results of the surveys, we may identfy the following internatonal patern in general: the intensity of innovaton increases with the size of the frm. For example, a great majority of small enterprises (10-49 employees) did not implement any types of organisatonal and marketng innovatons (see Table 5). In contrast, almost every second large frm implemented organisatonal and marketng innovatons. The other patern observed between the period of the CIS-6 and CIS-8 is that the share of these types of innovatons has declined. The decrease of innovaton actvity was higher than the average especially in the category of small frms.

Table 5. Relaton Between the Firm’s Size and All Types of Organisatonal (Including Marketng) Innovaton in Hungary (Community Innovaton Survey, CIS-4, CIS-6 and CIS-8)
Firm’s sizeCIS-4 (2002-2004)CIS-6 (2004-2006)CIS-8 (2006-2008)
10 - 49 employees 15% 16.5% 10.7%
50 - 249 employees 28,6% 24.9% 19.8%
250 and over 46.1% 49.0% 45.3%
Total: 18.3% 18.9% 13.3%
Note: Data based on the calculaton of Zsuzsa Szunyogh, Deputy Head of Division, Central Statstcal Ofce (KSH).

Dealing with the trends and intensity of “organisatonal innovaton only”, we may say that frms rather rarely rely on organisatonal development (from 4.1% to 13.1%) to improve their daily operatons. The other interestng patern is that the decreasing intensity of organisatonal innovaton has started in the CIS-4 (2002-2004). Between the CIS-6 and the CIS-8, the already rather modest share of organisatonal innovaton halved within the group of the small frms (8.8% vs. 4.1%) and almost halved in the category of the medium-sized frms (8.4% vs. 5.5.%) surveyed.

Table 6. Relatons between Organisatonal Innovaton Only /All Firms in Hungary (Community Innovaton Survey, CIS-4, CIS-6 and CIS-8)
Firm’s sizeCIS-4 (2002-2004)CIS-6 (2004-2006)CIS-8 (2006-2008)
10 - 49 employees 8.8% 8.8% 4.1%
50 - 249 employees 13.1% 8.4% 5.5%
250 and over 11.3% 10.8% 7.4%
Total: 9.5% 8.8% 4.5%
Note: The table based on the calculaton of Zsuzsanna Szunyogh, Deputy Head of Division, Central Statstcal Ofce (KSH)

This is rather an internatonally well-known patern. Organisatonal changes and innovaton are varying substantally by size-category of the frms. For example, according to the statstcally best documented Danish company practce survey (DISKO[5]), organisatonal changes (innovaton) are rather frequent in large frms: nine out of every ten frms – with more than 100 employees – have carried out organisatonal changes in one or both periods of the surveys. Among small frms – with less than 50 employees – almost every second (46%) did not introduce any organisatonal change.

It is worth notng the innovaton propensity of frms using the results of the employee-oriented surveys. The results of the last three waves of the European Working Conditons Surveys (EWCS) are partcularly suggestve[6]. Among the numerous questons aimed to measure the characteristcs of working practces, we intend to assess the results of the questons related to the “cognitve dimension” of jobs (i.e. learning new things at work, job rotaton requiring different skills, autonomy in quality supervision) and forms of training (i.e. “formal” versus “on-the-job training”) in the EU-27 countries. This job characteristc is indicatng the learning potental of the frm having direct impacts on its innovaton performance. In making cross-country comparison and applying an aggregated category as the EU-27 countries, we intend to compare the results of the above mentoned dimensions of working practces according to the following country profles reflectng the varietes of the social welfare models within the European countries [7]:

  1. Nordic countries,
  2. Contnental countries,
  3. Anglo-Saxon countries,
  4. Mediterranean countries,
  5. Post-Socialist countries.

Comparing the cognitve dimension of jobs in the EU-27 countries, we may say that countries belonging to the Nordic-country cluster perform visibly beter than the EU average in all respects: at least 4 employees out of 5 can learn new things at work, have autonomy to assess quality and every second of them partcipate in tasks rotaton requiring different skills. The Post-Socialist countries are on the other extreme pole of the country groups, where each cognitve dimension of the jobs has a lower value than the EU-27 average. This country group is followed by the Mediterranean countries that have a rather similar patern of job characteristcs. In additon, we have to indicate the declining importance of the “job rotaton requiring different skills” (“mult tasking and mult-skilling) in the Post-Socialist countries in comparison not only with the Nordic countries but with the EU-27 average: less than one-third of these employees rotate jobs, as shown in Table 7. The Anglo-Saxon and the Contnental countries occupy the middle positon between the Nordic and the Mediterranean / Post-socialist country groups.

Table 7. The Cognitve Dimension of Jobs: EU-27 versus Nordic and Post-Socialist Country Groups (2000 – 2010)
Features of job200020052010
EU-27Nordic countriesPostSocialist countriesEU-27Nordic countriesPostSocialist countriesEU-27Nordic countriesPostSocialist countries
Selfassessment of quality 73.4% 82.8% 63.9% 71.9% 78.7% 63.5% 72.8% 82.9% 63.5%
Learning new things at work 69.9% 84.7% 66.8% 69.9% 87.4% 67.4% 68.0% 86.3% 66.7%
Tasks rotaton that require different skills n.d. n.d. n.d. 33.7% 52.1% 32.8% 34.0% 54.1% 27.2%

Besides the cognitve characteristcs of the jobs, the importance and structure of training or skill/knowledge formaton indicates the learning/innovaton capacity of an organisaton. In this relaton, again, it is worth notng the leading-edge positon of the Nordic-country group: the share of employees partcipatng in (formal) training paid by the employer is signifcantly higher in this country group in comparison to both the EU-27 average and the Post-Socialist countries. However, as highlighted in Table 8., following a decline in the intensity of partcipaton in formal training in the PostSocialist countries between 2000 and 2005 (30.6% in 2000 versus 25.4% in 2005), this country group did improve its positon remarkably from 2005 to 2010 (25.4% in 2005 versus 34.8% in 2010). Another interestng patern to note is the importance of the “informal training” or “situated learning”. This kind of training represents the same share as the formal training and its importance has increased in the last half decade. Once again, the highest share of formal and informal training – almost every second employees surveyed – was registered in the Nordic countries. In this relaton it is necessary to note that the OJT (informal or situated learning) knowledge development practce evolved faster in the Post-Socialist countries than in the EU-27 countries. The share of employees paying for their training has increased in all country groups between 2005 and 2010 (no EWCS 2000 data is available on training paid by employees and on-the-job training).

Table 8. Company Training Practce: EU-27 versus Nordic and Post-Socialist Countries (2000-2010)
 EU-27Nordic countriesPostSocialist countriesEU-27Nordic countriesPostSocialist countriesEU-27Nordic countriesPostSocialist countries
Training paid by the employer 29.3% 47.85% 30.6% 26.24% 42.9% 25.4% 33.8% 48.13% 34.8%
On-the-job training (OJT) n.d. n.d. n.d. 26.3% 41.33% 28.6% 32.3% 48.13% 34.0%

The fnal chapter of the study focuses on the diffusion of organisatonal innovaton and knowledge development practces comparing Hungarian and Slovak frms operatng in the so-called Knowledge-Intensive Business Service sector (KIBS). As shown in Table 9., in each cognitve dimension of jobs Slovakia holds a beter positon than Hungary. In relaton to “self-assessment of quality” and “learning new things at work”, Slovakia performs around the average of the Post-Socialist countries. In the case of the “job rotaton requiring different skills” dimension, Slovakia outperforms the country group of the Post-Socialist countries (38.2% versus 32.8% in 2005 and 33.6 % versus 27.2 % in 2010).

Table 9. Cognitve Dimension of Jobs: Post-Socialist Countries versus Hungary and Slovakia (2000 - 2010)
Features of job200020052010
PostSocialist countriesHungarySlovakiaPostSocialist countriesHungarySlovakiaPostSocialist countriesHungarySlovakia
Selfassessment of quality 63.9% 43.3% 60.6% 63.5% 48.3% 52.2% 63.5% 43.0% 60.3%
Learning new things at work 66.8% 57.9% 67.2% 67.4% 58.9% 67.1% 66.7% 63.7% 64.0%
Tasks rotaton that require different skills n.d. n.d. n.d. 32.8% 15.6% 38.2% 27.2% 17.5% 33.6%

In relaton to company training practces, detailed in Table 10., we may say that the share of employees partcipatng in formal training paid by the employers and especially the importance of informal training (on-the-job training - OJT) is remarkably higher in the case of Slovak frms compared to the Post-Socialist country group average and notably to Hungarian frms. Finally, it is worth mentoning that the share of informal training in these two countries – partcularly in Slovakia – is higher in comparison to formal training. Both in the EU-27 and the Post-Socialist countries the share of formal and informal trainings is rather balanced.

Table 10. Company Training Practce: Post-Socialist Countries versus Hungary and Slovakia (2000 – 2010)
 PostSocialist countriesHungarySlovakiaPostSocialist countriesHungarySlovakiaPostSocialist countriesHungarySlovakia
Training paid by employer 30.0% 25.2% 40.2% 25.4% 15.7% 33.9% 34.8% 27.7% 36.2%
Onthe-job training (OJT) n.d. n.d. n.d. 28.6% 18.6% 47.4% 34.0% 28.3% 50.5%

Finally, it is worth notng that following the internatonal fnancial and economic crisis (2007-2009) the share of both formal and informal trainings in Slovakia is similar or slightly higher than in the EU-27 country group average and that the share of employees partcipatng in informal training is higher in Slovakia than in the Nordic country group.

Further Challenges in Measuring Organisatonal Innovatons: Some Remarks

In spite of the core importance of organisatonal innovaton in exploitng the potentals of other types of innovaton (e.g. TPP), a generally accepted and consistent theoretcal framework does not exist in the literature of organisatonal innovaton. Due to the underdeveloped theoretcal and methodological foundatons, a generally accepted defniton of this type of innovaton does not prevail. The concepts and views of the following theoretcal schools shape the various defnitons of organisatonal innovaton (Lam, 2005:116):

  1. Organisatonal design theory: this orientaton focuses on the interrelaton between structural forms and the willingness of an organisaton to innovate.
  2. Organisatonal cogniton and learning: this strand of literature deals with the capacity of organisatons to explore and exploit new knowledge necessary to innovate.
  3. Organisatonal change and adaptaton: this approach examines the frms’ capacity/capability to develop adequate answers to changes in external environment and how to influence it.

Another major weakness in the general defniton of innovaton – and especially in the case of organisatonal innovaton – is “… to treat innovaton as if it was a welldefned, homogeneous thing that could be identfed as entering the economy at a precise date – or becoming available at a precise point in tme … The fact is that the most important innovatons go through drastc changes in their lifetmes.” (Fagerberg, 2006:5). In other words, the instruments (i.e. questonnaire) designed to identfy or map the various types of innovaton (including organisatonal innovaton) do not realise the “contnuous” character of innovaton.

In additon, Coriat (2001) stresses the following weaknesses of survey methods aimed to identfy and assess organisatonal innovaton:

  1. The defnitons (implicit or explicit) used in surveys “do not generally encompass the whole dimension” of organisatonal innovatons.
  2. It is important to investgate the directon of organisatonal innovaton because the most radical organisatonal changes themselves may lead to reproduce the Taylorist principles of work organisatons.
  3. European companies are engaged in implementng organisatonal innovaton that results in a “self-fuelled dynamism”. However, there remains many possibilites to foster this process partly by public policies which have been so far mainly concerned by technological innovaton.
  4. Organisatonal innovaton always results in a beter organisatonal performance and organisatonal efciency influencing both the cost and non-cost related compettveness of frms.
  5. A more systematc comparison is needed between the theory of organisatonal innovaton and the empirical results.
  6. There is a contradicton between the obvious advantages offered by organisatonal innovaton and the relatve slowness of their diffusion. This can be explained by objectve and subjectve factors (i.e. the intensity of change in the environment varies by regions, sectors, etc., while the subjectve dimension means the ability of frms to perceive changes and the necessity to react to them). Another factor contributng to the low rate of diffusion of organisatonal innovaton is that the knowledge and know-how in this feld is poorly codifed with the excepton of the most widespread organisatonal standards like ISO and just-in-tme, to some extent. Finally, organisatonal innovatons generally reshape the hierarchical and governance structure of frms and this ofen creates conflict of interest among the different levels of frms’ hierarchy.

In summary, Coriat calls atenton to the complex character of the implementaton of organisatonal innovaton: “Organizatonal innovaton can only fully materialize if its systemic dimension is totally recalled and taken into account. We mean that a “local" change (concerning one aspect of the division and coordinaton of labour), may very well lead to no positve results, but even to supplementary dysfunctons if the organizaton is not adapted and made coherent with the locally introduced changes.” (ib. id. p.16.)

We intend to stress the rather problematc character of the distncton between “product” and “process” innovaton in the case of the service sector innovaton. In this sector, services are used or consumed at the point of the producton. The various waves of the CIS do not pay atenton to the signifcant differences between the manufacturing and the service sectors. (Beyhan, Dayar, Findik, Tandogan, 2009: 4). Untl know, there is no consent among the representatves of the “assimilaton”, “dissimilarity” or “synthesis” approaches aimed to beter understand innovaton in the service sector.

In spite of the experiences of several natonal innovaton surveys (e.g. the Danish DISKO surveys) on the key role of “knowledge absorptve capacity” in an innovatve organisaton, untl now this dimension of innovaton has been lef out of the existng organisatonal innovaton surveys (including the CIS). This capacity in an organisaton is not identcal with the formal qualifcaton which is the by-product of “learning as acquisiton”[8]. In relaton to the knowledge absorptve capacity of the organisaton, instead of solely insistng on the role of formal training “… what really maters is the ability to deploy qualifcatons in the job situaton. This makes competence an important concept, especially when it relates to the qualites of social capital as cooperaton capacity and communicaton skills internally between different functons, and extremely towards various actors. What the learning organisaton requires is a triad of formal educaton, competence and social capital” (Nielsen, 2006: 97).


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  1. Valeyre, et. al. 2009:23
  2. Coriat, B. (2001). During the literature review, we used an earlier version of this paper available at htp:// Dynacom/fles/D04_0.pdf.
  3. Coriat refers here to the seminal work of March and Simon (1993) in which the authors defned the noton of co-ordinaton as managing and processing informaton, knowledge and (conflictng) interests.
  4. In spite of the fact that the questons were not the same, the comparison was methodologically correct as both are large- -scale European cross-sector surveys measuring changes with retrospectve questons.
  5. DISKO is a Danish employer-oriented organisatonal survey aimed to identfy and assess the strengths and the weaknesses of the Danish Innovaton System in an internatonal perspectve. Untl now, at least four waves of the survey were carried out by the Aalborg University and the Statstcs Denmark. (Informaton provided by Peter Nielsen, Aalborg University)
  6. The frst EWCS was carried out in 1990 - 1991 covering 12 EU member states that made up the European Union at that tme. Our analysis focuses on the following three waves of the surveys: 2000 - 2001, 2005 and 2010. The last three surveys covered the Post-Socialist countries, too. “The survey sample is representatve of persons in employment (employees and self-employed), aged 15 years and over, resident in each of the surveyed countries. ... The survey sample followed a multstage, stratfed and clustered design with a ‘random walk’ procedure for the selecton of the respondents.” (Valeyre, et. al. 2009: ix.)
  7. The county groups are as follows: 1). Nordic countries: Denmark, Finland, Netherlands and Sweden, 2). Contnental countries: Austria, Belgium, Germany, France and Luxemburg, 3). Anglo-Saxon countries: United Kingdom and Ireland, 4). Mediterranean countries: Cyprus, Greece, Italy, Malta, Spain, Portugal, 5). Post-Socialist countries: Bulgaria, Czech Republic, Estonia, Hungary, Lithuania, Latvia, Poland, Romania, Slovenia and Slovakia. (Valeyre, et. al. 2009: 22). The “Varietes of Capitalism” (VoC) literature represents the theoretcal foundaton of the country classifcaton. In additon Sapir, A. (2005) Globalizaton and the Reform of European Social Models, Background Document for the Presentaton at ECOFIN Informal Meetng, Manchester, 9th September, (BRUEGEL –, p. 18
  8. For example, the so-called „labour process school” makes a distncton between “learning as acquisiton” and “learning as partcipaton”. “The former refers to a conceptualizaton, which views learning as a product with a visible, identfable outcome, ofen accompanied by certfcaton or proof of atendance. The later perspectve, on the other hand, views learning as a process in which learners improve their work performance by carrying out daily actvites.” (Felstead, et al. 2008:5). This classifcaton is similar to the distncton of “formal educaton” and “competence development” or “situated learning”.