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This study draws on employment relations and management theory, claiming that certain innovative employment practices and work structures pave the way for organizational innovation, namely investments in information technology (IT). It then finds support for the theory in a cross-section of UK workplaces. The findings suggest that firms slow to adopt IT realize that their conventional employment model hinders their ability to make optimal use of new technologies. Therefore, the paper advances the literature beyond studies of unionization's impact on business investment to a broader set of issues on the employment relations features that make organizations ripe for innovation.