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Innovation strategies and firm performance

Author

Listed:
  • Peter Bogetoft

    (Copenhagen Business School)

  • Lene Kroman

    (University of Western Ontario)

  • Aleksandrs Smilgins

    (Copenhagen Business School)

  • Anders Sørensen

    (Copenhagen Business School)

Abstract

Innovation is often seen as crucial for firm survival and as a way for firms to differentiate themselves from their rivals. However, innovation studies are vague about the actual importance of different innovation strategies. In this study, we distinguish between pure product, process, organizational, and marketing innovations and their combinations. We use a (balanced) panel data set with more than 15,000 firm-year observations for manufacturing firms to analyze the performance of firms with different innovation strategies. Additionally, we investigate from a societal perspective whether innovation facilitates less efficient firms to catch up, or whether firms already utilizing best practices are the main beneficiaries. Using Data Envelopment Analysis (DEA), we find the highest increase in firms’ performance among the firms with innovation strategies that combine product innovation with other innovation types. This finding applies to both the short and the longer term. We also conclude that catch-up is strongest among the firms adopting pure process innovation, whereas the other innovation strategies are primarily associated with frontiers shifts.

Suggested Citation

  • Peter Bogetoft & Lene Kroman & Aleksandrs Smilgins & Anders Sørensen, 2024. "Innovation strategies and firm performance," Journal of Productivity Analysis, Springer, vol. 62(2), pages 175-196, October.
    • Handle: RePEc:kap:jproda:v:62:y:2024:i:2:d:10.1007_s11123-024-00727-1
    DOI: 10.1007/s11123-024-00727-1
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