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Untangling the Innovativeness-Performance Puzzle
Abstract
This chapter investigates the relationships between innovativeness and firm performance from a multidimensional viewpoint. As previous studies have shown controversial results on the performance implications for innovative capacity, the promising venue for the innovation research study is to address the question of under which conditions innovativeness leads to improved financial performance. To this end, the results of this study demonstrate some major findings. First, non-technical innovativeness exerts positive influence over technical innovativeness. Second, novelty of technical innovation activities causes a diminishing effect on financial performance due to the ambiguity of value-creation. Third, technical innovativeness enhances financial performance when the relationship between technical innovativeness and financial performance is mediated by market effectiveness and production efficiency. Overall, this chapter clarifies the conflicting results on the innovativeness-financial performance link and hence contributes to the innovation literature.
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