This paper examines the relationship between workplace organisation and innovation in small and medium-sized enterprises (SMEs). It uses data for 30 countries, drawn from the European Company Survey, the OECD Programme for International Assessment of Adult Competencies and the Community Innovation Survey. It contrasts SMEs adopting a “learning organisation” or “discretionary learning” form of workplace organisation with SMEs adopting more hierarchical organisational forms. Learning organisation or discretionary learning SMEs are characterised by high levels of self-planning of tasks by employees, teamwork, knowledge exchange with employees and supervisors, on-the-job training, and employee performance incentives. They account for approximately one-third of SMEs across the countries examined. SMEs with this form of work organisation are more likely than other SMEs to develop new products/services and processes. At a macro level, countries with high proportions of these SMEs have higher rates of new-to-the-market innovations among SMEs and of SME innovation collaborations with other firms and organisations. The findings point to the potential role of policies favouring organisational change in SMEs as a means of stimulating SME innovation.
