This articles reports on the results from a study which examined the relationship between the increasing use of various forms of 'flexible employment contracts' and the incidence of product and process innovations. One body of literature on product and process innovation suggests that it is dependent on attracting, building and nurturing key capabilities. Part of this argument is that employees will be prepared to contribute discreationary effort and to carry the risks involved in innovations only if they have a sense of security in their employment. Innovation, it has been suggested, is 'path dependent' that is, it emerges from prior experimentation and learning. This thesis might reasonably be regarded as akin to the high commitment end of the human resource management spectrum. Thus, in the face of two decades, or more of outsourcing, an increased use of temporary contracts and part-time working, question arise about the consequences of such departures from the secure employment contract for the achievement of product and process innovaation.