This paper examines how cooperation with different partners in innovation activities shapes firm employment and performance. Using panel data from the Hungarian Community Innovation Survey linked to administrative firm-level financial data, I show that vertical cooperation increases the gain from innovation. Following an innovation, firms that engage in vertical cooperation in their innovation activity are associated with 3.5% higher employment, 5.7% higher value added, and 3.7% higher total factor productivity, on top of the estimated effect of innovation itself. Cooperation with other partner types has no significant direct effect on employment or performance.