Employee Autonomy: More Freedom More Innovation? An empirical study on the effects of employee autonomy on start-up innovation performance in Europe.

Abstract

Since 2022, 5 million new start-ups have been created, making a 42% increase from pre pandemic levels. Innovation is the lifeblood of start-ups, and understanding the mechanisms that drive it has become crucial in today’s competitive business landscape. Start-ups, characterized by their risk-taking nature and limited resources, rely on their employees as unique sources of knowledge to gain a competitive edge. This research investigates the effect of employee autonomy on start-up innovation performance in three different types of innovation: product, process and marketing innovation. Using data from the European Company Survey of 2019, this study employs an Ordinary Least Squares (OLS) regression to examine the relationships between employee autonomy and start-up innovation in product, process and marketing. The results of this study show that employee autonomy increases start-up process innovation. No significant effects are found regarding the effects of employee autonomy on product and marketing innovation. Moreover, only when employees responsible for innovation have access to a personal computer they will innovate. The theorised positive effect of other factors such as employee ideas or employee motivation remains unclear. The findings of this study offer important contributions to enhancing managerial practices and developing human resources strategies in start-ups in Europe.