“…Kleinknecht et al (2014) our key contention is that that there is no reason to exclude that it is the decision to invest in innovative projects that conversely generates the incentives to hire on a permanent basis. Expanding on the growing literature on organizational equilibria and institutional complementarities (Earle et al, 2006;Gürpinar, 2016;Landini, 2013;Nicita and Pagano, 2016;Pagano, 2011;Pagano and Rossi, 2004;Pagano and Rowthorn, 1994), we thus show that these two directions of causality are not mutually exclusive, but rather, they reinforce and sustain each other.…”