Although there are opposing theoretical arguments on the relationship between the strength of a country's employment protection laws (EPLs) and innovation, empirical evidence tilts towards a positive relationship. However, research has mainly focused on the early stages of the innovation process, such as R&D and patenting. This study examines the role of EPLs in the later stages of the innovation process: the commercialization of new products. In particular, we focus on EPLs' relationship with two different new product commercialization outcomes: the launch and subsequent sales of new products. Using data on small European firms, we find that, controlling for invention, stricter EPLs are negatively associated with firms' likelihood of launching new products, but positively associated with the sales from new products. We discuss the implications of our results for theory and practice. •Past research mainly focuses on employment protection laws (EPLs) and invention.•Focus on EPLs and two aspects of new product commercialization: launch and sales.•EPLs relate negatively to new product launch decisions.•However, EPLs relate positively to new product sales.•The results hold when controlling for, and are independent of, R&D intensity.