High quality workplace training and innovation in highly developed countries

Several studies associate vocational education in general with a strong focus on established technologies and a high firm specificity and therefore expect vocational education not to have positive effects on innovations in firms. However, a specific form of vocational education deviates from this notion and provides firms with new knowledge to generate innovations. Vocational education that a collective of firms organizes (like in Germany and Switzerland) has a governance structure that coordinates collective action in order to define training curricula with joint standards. Firms revise these curricula jointly and thereby diffuse new knowledge to all firms that participate in vocational education by training apprentices. In this paper we describe the governance structure of vocational education and identify four different phases of knowledge diffusion that occurring during the definition of joint training standards: knowledge collection, synthesis, transfer and application. The results of our empirical analysis reveal that participating in collectively organized vocational education by training apprentices has a positive impact on a firm's innovations. We show that collective action of firms can generate a specific form of vocational education that provides innovation-relevant knowledge, diffuses it and thereby has a positive effect on innovation in firms.