A Comprehensive Validated Model of Innovation and Performance: An Empirical Study of Turkish Companies

Abstract

Organizations should maintain their innovation trajectories by developing products, processes, marketing, and organizational methods to achieve and sustain competitive advantage. However, by itself, creating value through innovation is not enough for companies: transforming these innovations into firm performance is also crucial. This study aims to validate the relationships among innovation and firm performance components and to explore the effect of innovation culture on innovation components and personnel performance. In our model, the innovation construct is comprised of innovation input, innovation process, and innovation output components, while firm performance construct includes four performance components such as financial, customer, market, and personnel performance. Moreover, this comprehensive model was proposed based on the literature, and structural equation modeling (SEM) was performed by employing data gained from 353 companies in Turkey to validate the model. According to the results, there is a sequential relationship within innovation components and firm performance components, while the relationships among innovation components and firm performance components are observed holistically. This paper contributes to the innovation literature by introducing a validated model to clarify these relationships. This model can be evaluated by company leaders to identify not only their firm’s innovation path but also short and long-term innovation results. Furthermore, the findings indicate that companies should manage the system from innovation input to financial gains without delicately compromising the whole sequential and holistic relationship. Managers should also be aware of the power of innovation culture on innovation path and personnel performance directly to create a convenient atmosphere.