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Innovation and firm performance

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  • Jeroen de Jong
  • Ron Kemp
  • Mickey Folkeringa
  • Wubben

Abstract

In this paper, the current state of knowledge regarding the relation between innovation and firm performance is reviewed. The relationship is empirically tested. There is a special focus on small and medium-sized firms. In the literature, there is a trend towards a system approach. Empirical studies using this approach distinguish four parts in the innovation-performance relationship. First of all, a company decides whether or not to innovate. Secondly, if a company decides to innovate, what is the level of input in innovation. The innovative input will be transformed into innovative output. And finally, the innovative output will result in a better firm performance. In the model several feedback loops are incorporated, for instance, from firm performance to innovative input.

Suggested Citation

  • Jeroen de Jong & Ron Kemp & Mickey Folkeringa & Wubben, 2003. "Innovation and firm performance," Scales Research Reports H200207, EIM Business and Policy Research.
  • Handle: RePEc:eim:papers:h200207
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