Innovation and Performance

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2018-04-12
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Abstract
My dissertation consists of three studies that connect innovation to performance in different ways. In my first study, I investigate how product quality, productivity, and customer satisfaction as intermediate performance measures capture information about current innovation activities and serve as leading indicators of future financial performance. My first study also investigates how these links from innovation to performance differ across strategies. Estimating seemingly unrelated regression (SUR) models, I find that increases in quality, productivity, and customer satisfaction are important value drivers that link different types of innovation to higher future ROS and sales growth. For differentiators, product innovations that increase product quality and customer satisfaction lead to higher performance. For cost leaders, improved process innovation that increases productivity leads to performance. In my second study, I consider how the introduction of new information technology (IT) and organizational change, as two types of organizational innovation activities, affect productivity over time. Measuring productivity improvements using data envelopment analysis (DEA), I find that new IT has a positive impact on organizational productivity in both the first and second years after the introduction of new IT. In contrast, organizational change has a negative productivity effect in the first year, followed by a positive effect in the second year. This pattern indicates that the beneficial effect of new IT is realized quickly, but organizational change has an initial disruptive effect before its beneficial effect on productivity is realized. I also find that new IT and organizational change have complementary effects on productivity. In my third study, I investigate how two strategic positions – differentiation (externally focused) and cost leadership (internally focused) – moderate the impact of innovation activities on operating performance. I use DEA to construct an aggregate performance index that combines the information in profit margin and sales growth as the dependent variable. Estimation results show that differentiation positively moderates the impact of product innovation on performance and cost leadership positively moderates the impact of process innovation on performance. This study demonstrates the importance of strategic capability and the alignment of strategy with innovation.
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Citation
Hyun, S. (2018). Innovation and performance (Doctoral thesis, University of Calgary, Calgary, Canada). Retrieved from https://prism.ucalgary.ca. doi:10.11575/PRISM/31788