Association between technological innovation and firm performance in small and medium-sized enterprises

2019 ◽  
Vol 11 (2) ◽  
pp. 227-240 ◽  
Author(s):  
Dja Shin Wang
Keyword(s):  
Firm Performance ◽  
Environmental Factors ◽  
Technological Innovation ◽  
Negative Impact ◽  
Radical Innovation ◽  
Path Model ◽  
Incremental Innovation ◽  
Content Type ◽  
Innovation Strategies ◽  
The Relationship

Purpose In developing countries, numerous small- and medium-sized enterprises (SMEs) must innovate because of their scarce resources. This study aims to address the ambidextrous innovation (radical and incremental) associated with firm performance on the SMEs and investigate the moderating effect of environmental factors on the relationship between technological innovation and firm performance. Design/methodology/approach The authors formulate a path model with the variables to investigate the impacts of the two different innovation strategies and their joint effects on firm performance. Meanwhile, they hypothesized that external environmental factors – market dynamism, labour availability, business cost and competitive hostility – moderate the association of radical and incremental innovations with firm performance. The validity of the proposed model was evaluated using a structural equation modelling approach. Confirmatory factor analysis was used to evaluate the convergent validity of the constructs. Findings The authors find that positive association between radical innovation and firm performance; it shows that the radical innovation strategies are positively related to firm performance in SMEs. They also find that the relationship between radical innovation and firm performance has moderated by environmental factors. Second, they find that the incremental innovation strategies have a negative impact to firm performance, and the relationship between incremental innovation and firm performance has no moderated by environmental factors. Practical implications This paper suggests that the managers of SMEs must involve in technological innovation, and offer fourth main implications above. In particular, the authors forewarn SMEs’ managers of the necessity of generating that the relationship between radical innovation and firm performance has moderated by environmental factors, there are approaches fourth items around. Originality/value This study highlights the crucial importance of the mediating role of environmental dynamism when examining the relationship between ambidexterity (radical and incremental innovations) with firm performance; firms can perceive environmental factors and develop technological innovation strategies to enhance business performance.

scholarly journals The interplay between firms’ internal and external capabilities in exploration and exploitation

2018 ◽  
Vol 56 (7) ◽  
pp. 1559-1580 ◽  
Author(s):  
César Camisón ◽  
Montserrat Boronat-Navarro ◽  
Beatriz Forés
Keyword(s):  
Radical Innovation ◽  
Positive Influence ◽  
Incremental Innovation ◽  
Hierarchical Regression ◽  
Moderating Effects ◽  
Exploration And Exploitation ◽  
Content Type ◽  
Relationship Of ◽  
The Relationship ◽  
Positive Effect

PurposeThe purpose of this paper is to enrich the explanation of the interplay between internal and external – or district shared – exploration and exploitation capabilities as antecedents of a firm’s radical and incremental innovation. Previous studies do not differentiate between exploration and exploitation in district shared capabilities and how they interact with internal capabilities.Design/methodology/approachThe paper uses hierarchical regression analysis to test the quadratic and moderating effects in a sample of 1,019 Spanish firms.FindingsResults show an increasingly positive effect on radical innovation of exploration capabilities, enhanced by shared capabilities in exploration. In the case of incremental innovation, the study finds evidence of an increasingly positive influence of exploitation capabilities and a concave relationship of exploration capabilities. Moreover, shared exploitation capabilities weaken the effect of internal exploitation capabilities and also have a direct effect on incremental innovation. Therefore, the two capabilities are interchangeable in the effect they have on incremental innovation.Practical implicationsDepending on the firm’s innovation strategy, intra-district firms should develop specific capabilities and/or concentrate on adopting the shared capabilities in the destination.Originality/valueThe study furthers the understanding of the relationship between exploration and radical innovation, and between exploitation and incremental innovation, which is more complex than previously depicted. The study also differentiates between exploration and exploitation in shared capabilities, enriching understanding of the competitiveness of district firms.

Market, entrepreneurial, and technology orientations: impact on innovation and firm performance

2017 ◽  
Vol 55 (2) ◽  
pp. 248-270 ◽  
Author(s):  
Akin Kocak ◽  
Alan Carsrud ◽  
Sonyel Oflazoglu
Keyword(s):  
Firm Performance ◽  
Small And Medium Enterprises ◽  
Radical Innovation ◽  
Incremental Innovation ◽  
Entrepreneurial Firms ◽  
Radical Product ◽  
Content Type ◽  
Marketing Managers ◽  
Strategic Orientations ◽  
The Impact

Purpose The purpose of this paper is to examine the effects of market, technology, and entrepreneurial orientations (EOs) on both innovation and firm performance. It analyzes the mediating effects of incremental and radical innovation within the context of entrepreneurial firms in Turkey, an emerging economy. Design/methodology/approach This study empirically analyses the impact of strategic orientations on firm performance through innovation with a sample of 818 small and medium enterprises in Turkey. To test the proposed model, LISREL is used. Findings Proactive market orientation (MO) and technology orientation (TO) lead to radical innovation, while responsive MO strongly affects incremental innovation. EO impacts performance directly and indirectly via both incremental and radical innovation. Practical implications Finding suggests that senior management of firms, especially in emerging economies should encourage marketing managers to focus on key trends of markets, both existing and emerging. These marketing managers should find and work with lead users to improve radical product development. This means that those managing marketing need to be well schooled in technology, and they should also possess a proactive MO. Originality/value The present study employs a two-part view of the MO construct (responsive and proactive MO). This conceptualization provides a greater degree of precision in the use of the MO concept which was rarely employed in prior studies. Moreover, this paper views strategic orientations as drivers of innovation and examines how radical and incremental innovation mediate the effects of MO, EO and TO on firm performance. Finally, this is one of the few studies to look at all of these factors simultaneously and to include the two-part view of MO.

scholarly journals Does bribery have a negative impact on firm performance? A firm-level analysis across 132 developing countries

2016 ◽  
Vol 22 (3) ◽  
pp. 398-415 ◽  
Author(s):  
Colin C Williams ◽  
Alvaro Martinez-Perez ◽  
Abbi Kedir
Keyword(s):  
Developing Countries ◽  
Firm Performance ◽  
Growth Rates ◽  
Developing World ◽  
Negative Impact ◽  
National Level ◽  
Firm Level ◽  
Content Type ◽  
The Relationship ◽  
Level Analysis

Purpose – Reflecting the moral theorisation of bribery as a negative phenomenon, bribery has been widely shown to have a deleterious impact at the national level on economic development and growth. The purpose of this paper is to evaluate whether it is also the case at the firm level that bribery has negative impacts on firm performance. Until now, the few studies conducted in individual nations and regions have produced mixed results. Here, therefore, a more comprehensive evaluation of the relationship between bribery and firm performance is undertaken across the developing world. Design/methodology/approach – To do so, World Bank Enterprise Survey data on 106,805 enterprises across 132 developing countries is used to provide a firm-level analysis of the relationship between bribery and firm performance. Findings – The finding is that bribery enhances firm performance. Firms asserting that it is necessary for enterprises like theirs to give gifts or payments to public officials in order to get things done have 13.9 per cent higher average annual sales growth rates and 48 per cent higher annual productivity growth rates, after controlling for other determinants of firm performance. Practical implications – Given that engaging in bribery at the firm level results in higher firm performance, despite bribery having an overall detrimental negative impact at the country level, public authorities will need to develop measures to alter not only the cost-benefit ratio confronting individual enterprises but also the institutional deficiencies that result in the prevalence of bribery. Originality/value – This is the first firm-level evaluation of the relationship between bribery and firm performance across the developing world.

Female directors and firm performance in Italian and Spanish listed firms

2019 ◽  
Vol 32 (3) ◽  
pp. 411-436
Author(s):  
Juan Francisco Martín-Ugedo ◽  
Antonio Mínguez-Vera ◽  
Fabrizio Rossi
Keyword(s):  
Firm Performance ◽  
Cultural Values ◽  
Negative Impact ◽  
Positive Impact ◽  
Thinking Styles ◽  
Method Of Moment ◽  
Content Type ◽  
Female Directors ◽  
The Relationship ◽  
Practical Implications

Purpose The purpose of this paper is to examine the relationship between women on the board of directors and firm performance in a comparative analysis between Italy and Spain. Design/methodology/approach The generalized method of moment is employed to examine this relationship in a sample of 1,393 firm-year observations. Findings The results show that the presence of women on the board has a positive impact on the performance of Italian and Spanish firms. However, when the whole sample is divided into Italy and Spain, some results are remarkable. For Spain, the presence of women on the board has a positive influence on firm performance, whereas for Italy the authors find a negative and significant effect on firm performance. This study also finds that the “masculinity” dimension has a negative impact on firm performance. Practical implications The results of this study have several practical implications. First, masculinity differences within the countries can have a large impact on firm performance and can explain some differences between similar countries. Second, the legal system of countries might not explain adequately some differences in the decision-making process. Third, cultural values and thinking styles, in terms of masculinity, might better explain why the results on the relationship between female directors and firm performance are mixed. Fourth, the findings suggest that it is very important to promote gender equality, not only by passing laws but also taking action about the educational system. Originality/value To the best of the authors’ knowledge, this is the first study that investigates the relationship between female directors and firm performance between Italy and Spain considering the cultural differences in term of “masculinity.”

Does capital structure mediate the link between CEO characteristics and firm performance?

2020 ◽  
Vol 58 (1) ◽  
pp. 164-181 ◽  
Author(s):  
Muhammad Akram Naseem ◽  
Jun Lin ◽  
Ramiz ur Rehman ◽  
Muhammad Ishfaq Ahmad ◽  
Rizwan Ali
Keyword(s):  
Firm Performance ◽  
Capital Structure ◽  
Negative Impact ◽  
Ceo Duality ◽  
Content Type ◽  
Financial Decisions ◽  
Gender And Education ◽  
The Impact ◽  
The Relationship ◽  
Ceo Characteristics

Purpose The purpose of this paper is to empirically capture the impact of a chief executive officer’s (CEO) personal and organizational characteristics on firm performance in the context of a developing country and to explore whether capital structure mediates the relationship between CEO characteristics and firm performance. Design/methodology/approach In order to test the hypothesized model, CEO duality, tenure and personal characteristics (age, gender and education) were taken as explanatory variables to study their impact on firm performance. Data were collected from 179 Pakistani companies from 2009–2015. The collected data were processed via panel data regression analysis under fixed effect assumptions. Findings Results show that CEO duality has a negative impact on firm performance and that a CEO with a dual role is more inclined toward debt financing. Moreover, a CEO with a longer tenure tends to be opportunistic and prioritize his/her personal interest while making strategic financial decisions, thus creating agency costs for the firm. Furthermore, CEO characteristics like age, gender and education have significant effects on firm financial decisions and firm performance. Finally, the debt and equity ratio partially mediates the link between CEO characteristics and firm performance. Research limitations/implications The findings of this study have limited generalizability due to the specific nature of the sample characteristics. Originality/value To the best of the authors knowledge, this study is the first to explore the impact of CEO characteristics on capital structure and firm performance. This work is also the first to explore the mediating role of capital structure in the relationship between CEO characteristics and firm performance by using Pakistani data.

Investigating open innovation strategies and firm performance: the moderating role of technological capability and market information management capability

2020 ◽  
Vol 35 (1) ◽  
pp. 23-39 ◽  
Author(s):  
Suqin Liao ◽  
Lihua Fu ◽  
Zhiying Liu
Keyword(s):  
Firm Performance ◽  
Information Management ◽  
Open Innovation ◽  
Technological Capability ◽  
Market Information ◽  
Content Type ◽  
Management Capability ◽  
Innovation Strategies ◽  
The Relationship

Purpose This study aims to assess how firm functional capability moderates the relationship between two types of open innovation and performance, with a special focus on the role of technological capability and the join effect market information management capability. This paper develops and tests a research model, which assesses how the performance implications of two open innovation forms are shaped by the technological capability and how such an effect is contingent on market information management capability. Design/methodology/approach Survey data were collected from 238 Chinese high-tech enterprises. Structural equation modeling and linear regression were used to test the data. Then, the main research questions were answered. Findings Empirically results show that technological capability strengthens the influence of inbound open innovation on firm performance. However, the moderate effect of technological capability on the relationship between outbound open innovation and firm performance remains unsupported. A higher technological capability with a high level of market information management capability increases the efficacy of outbound open innovation in gaining superior performance. Additional analysis shows that when firms implement inbound activities and possess a strong technological capability, they will achieve higher performance if they possess a moderate level of market information management capability, compared with a high or low level. Originality/value This paper provides new evidence on the benefits of different open innovation strategies on firm’s performance and, more importantly, the specific firm-level contingencies (technological capability and market information management capability) under which these benefits are more likely to be enhanced. It clarifies what the capabilities are and how they interact to foster the robust open innovation strategies, which sheds new light on the boundary conditions that affect the open innovations–firm performance relationship.

Relational capital and supply chain collaboration for radical and incremental innovation

2019 ◽  
Vol 31 (4) ◽  
pp. 1076-1094 ◽  
Author(s):  
Nguyen Thi Mai Anh ◽  
Lei Hui ◽  
Vu Dinh Khoa ◽  
Sultan Mehmood
Keyword(s):  
Factor Analysis ◽  
Supply Chain ◽  
Information Sharing ◽  
Radical Innovation ◽  
Hunan Province ◽  
Incremental Innovation ◽  
Relational Capital ◽  
Supply Chain Collaboration ◽  
Content Type ◽  
The Relationship

PurposeThe purpose of this paper is to investigate the relationship between relational capital and supply chain collaboration (SCC) and how this relationship relates to innovation. The authors propose a theoretical framework to illustrate the effect of relational capital on three dimensions of collaboration and radical and incremental innovation.Design/methodology/approachThe paper has a quantitative approach. The authors conducted the survey to collect the data from 225 suppliers in the Hunan province of China. The proposed model is tested with exploratory factor analysis, confirmatory factor analysis and structural equation modelling.FindingsThe findings show that relational capital can facilitate information sharing and benefit/risk sharing when firms work together to achieve innovation. Furthermore, the results indicate that relational capital leads to radical innovation through facilitating information sharing among firms and helps in generating incremental innovation by encouraging firms to share risks and benefits with their partners.Practical implicationsThe findings of this study give some suggestions for managers of the firms in terms of building their collaborative strategies. Managers should exploit relational capital to build successful and long-term collaboration. Also, through relational capital, managers can share information to create radical innovation or pool risks and share benefits with their customers to achieve incremental innovation.Originality/valueThis study provides a nuanced understanding of the relationship between relational capital, different dimensions of SCC and innovation in the context of a developing economy. Moreover, the findings provide a clearer understanding of the collaborative mechanism of relational capital and collaboration to achieve radical and incremental innovation.

The inconvenient truth of the relationship between open innovation activities and innovation performance

2015 ◽  
Vol 53 (3) ◽  
pp. 625-647 ◽  
Author(s):  
Colin C.J. Cheng ◽  
Eric C. Shiu
Keyword(s):  
Open Innovation ◽  
Radical Innovation ◽  
Innovation Performance ◽  
Least Square ◽  
Organizational Capabilities ◽  
Incremental Innovation ◽  
Content Type ◽  
Innovation Activities ◽  
The Relationship ◽  
Knowledge Learning

Purpose – Despite extensive published research into the relationship between open innovation (OI) activities and performance, the nature and direction of the relationship remain inconclusive. The purpose of this paper is to investigate the relationship as to how firms’ inbound and outbound OI activities, as well as their interaction influence incremental and radical innovation performance. The authors also consider the potentially mediating roles of knowledge learning and organizational capabilities in such a relationship. Design/methodology/approach – To investigate this relationship, data were collected from a cross-industry survey of 304 leading Taiwanese-based firms. Three-stage least square analysis was employed to test the model. Findings – Analyses reveal that knowledge learning and organizational capabilities mediate the OI activities-innovation performance relationship. In addition, a firm focussing on inbound activities enhances its radical innovation performance, but hinders its incremental innovation performance, while focussing on outbound activities produces the opposite effects. Among the findings, it is worth emphasizing that the effect of the interaction between inbound and outbound activities on innovation performance can be counter-productive. Research limitations/implications – The findings demonstrate that existing studies only partially explain the effects of OI activities on innovation performance. Understanding how OI activities influence innovation performance will facilitate more informed decision making, leading to more effective use of OI activities. Practical implications – The results suggest that managers need to consider knowledge learning and organizational capabilities in order to fully capture the potential effects of OI activities. Managers also need to be aware of the limitations of OI activities. Originality/value – The theoretical model presented here offers a timely contribution to the theory base underpinning the development of OI activities for innovation performance.

Radical innovation, incremental innovation, and competitive advantage, the moderating role of technological intensity: evidence from the manufacturing sector in Jordan

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ayman Wael Al-Khatib ◽  
Eyad Mustafa Al-ghanem
Keyword(s):  
Competitive Advantage ◽  
Manufacturing Sector ◽  
Radical Innovation ◽  
Incremental Innovation ◽  
High Tech ◽  
Content Type ◽  
Technological Intensity ◽  
The Relationship ◽  
Moderating Role

Purpose The purpose of this paper is to identify the effect of radical innovation and incremental innovation on the competitive advantage of Jordanian industrial companies and identify the moderating role of technological intensity. Design/methodology/approach For this study’s purposes, 303 questionnaires from employees of 30 manufacturing firms were analysed. Convergent validity and discriminant validity tests were performed through structural equation modelling in the Smart-PLS programme. Data reliability was confirmed. A bootstrapping technique was used to analyse the data. Multi-group analysis was performed to investigate the moderating role of technological intensity. Findings Empirical results showed that both radical innovation and incremental innovation explain 60.2% of the variance in competitive advantage and that both constructs have a statistically significant effect on competitive advantage. The results also revealed that the relationship between radical innovation and competitive advantage is modified through the high-tech industries. Meanwhile, the relationship between incremental innovation and competitive advantage is modified through the low-tech industries. Research limitations/implications This cross-sectional study provides a snapshot at a given moment in time, a methodological limitation that affects the generalization of its results and the results are limited to one country, Jordan. Practical implications This study promotes the idea of focusing on radical and incremental innovation to enhance competitive advantage in the Jordanian manufacturing sector and knowing the effect of technological intensity in this relationship. Originality/value This study has important implications for leaders in the Jordanian manufacturing sector in general, as the study highlights the importance of radical innovation and incremental innovation to enhance the competitive advantage, especially in light of the technological intensity in this sector, and thus, increase the innovative capabilities of this firms, which leads to an increase in the level of competitive advantage.

Leveraging supply chain collaboration in pursuing radical innovation

2018 ◽  
Vol 10 (3) ◽  
pp. 350-370 ◽  
Author(s):  
Erlinda N. Yunus
Keyword(s):  
Supply Chain ◽  
Firm Performance ◽  
Structural Equation ◽  
Positive Impact ◽  
Radical Innovation ◽  
Incremental Innovation ◽  
Equation Modeling ◽  
Supply Chain Collaboration ◽  
Content Type ◽  
The Impact

PurposeThe purpose of this study is to examine the relationship between supply chain collaboration and innovation. It particularly investigates the effect of collaboration on radical innovation and highlights the positive impact of innovation, both radical and incremental, on business performance.Design/methodology/approachA survey of 230 Indonesian firms was conducted and the instrument was tested for reliability and validity to warrant its psychometric properties. The data were analyzed using structural equation modeling.FindingsThis study reveals that collaboration with suppliers brings radical innovation, while collaboration with customers brings incremental innovation. Contrary to this study’s conjecture, albeit interesting, collaboration with customers negatively affects radical innovation. Both radical and incremental innovations further exert a positive influence over firm performance.Research limitations/implicationsThis study focuses on the relationships between supply chain collaboration, innovation and firm performance. The results enhance our understanding of types of innovation that are promoted by each dimension of collaboration. Further studies could extend the research by using a more elaborate measure of innovation or perform a longitudinal examination.Practical implicationsManagers are encouraged to pursue innovation as it improves firm performance. They could exploit their current partnership with customers to generate incremental innovation or leverage their supplier network to develop radical innovation.Originality/valueStudies that specifically investigate the impact of firms’ collaboration with their supply chain partners on radical innovation are quite scarce. This empirical study is among the very few to fill this void by providing an integrative assessment of customer, supplier and internal collaborations and their impact on both radical and incremental innovation.

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