An established tenet of the literature is that the use of flexible labor leads to less innovation. Yet, less attention has been paid to the possibility that it is the decision to innovate that generates the incentive to hire on a permanent basis. The goal of this paper is to show the existence of interlocking complementarities between the firm's technological and hiring strategies. To do so, we develop a simple model where the workers’ decision to invest in human capital is affected by the type of employment contract (temporary versus permanent) and by the type of technological investments (routine versus innovative). When the firm is unable to coordinate its actions across these different domains, two equilibria simultaneously exist: in the ‘high-road’ equilibrium, firms invest more in innovative projects and hire on a permanent basis; in the ‘low-road’ equilibrium, they invest more in routine projects and hire on a temporary basis.

The development of either internal or external employability of temporary workers has been considered a mechanism of protection since it ensures that employment can be maintained. According to the social exchange theory and the norm of reciprocity, when temporary workers perceive that the training promoted by the organization furthers employability, they are inclined to feel obligated to reciprocate with positive attitudes toward the organization. With a sample of temporary agency workers from three distinct industry organizations (N = 279), the current study investigated the relationship between training that promotes both internal and external employability and affective commitment as well as the role of voluntariness as a moderator of these relationships. The hypotheses were tested by using regression analysis. The results indicated that the perception held by temporary workers that the training they received is a promoter of their internal employability is positively correlated with their affective commitment towards the organization. Furthermore, the data revealed that this relationship is weaker for the group of temporary workers with high voluntariness. On the other hand, there was not a significant relationship between the training that promotes external employability and the affective commitment of temporary workers. Likewise, voluntariness did not moderate this relationship.

The increasing use of temporary work prompts the need to understand to what degree workers with this type of contract differ from permanent workers as to the relationship they establish with the organization they work for. This study used a sample of temporary workers (N = 78) and permanent workers (N = 196) within the same company of electronics in Portugal. The results show that, regardless of the type of contract, the perception of human resource practices was related to the perception of psychological contract fulfillment by the company. Additionally and according to the norm of reciprocity, we verified that when workers thought the company was fulfilling its obligations they responded favorably showing more affective commitment towards the company. However, we found differences between these two groups of workers: for the permanent performance appraisal, training and rewards were human resources practices that were significantly related to psychological contract fulfillment, while for the temporary ones there weren't any specific practices that had a significant relationship with that variable. The practical implications of these findings for the management of temporary workers are discussed.