Labor outsourcing and corporate innovation

This study investigates the impact of labor outsourcing on innovation, using manually collected data from Chinese A-share listed companies from 2012 to 2022. The results indicate that labor outsourcing significantly enhances firms’ innovation level. This relationship is primarily driven by improvements in financial flexibility and operational flexibility. Furthermore, we find that this positive relationship is more pronounced for firms facing high financial constraints and economic policy uncertainty, and firms located in regions with low population aging. The findings also suggest that labor outsourcing encourages enterprises to prioritize innovations with low rather than high originality.