Complementarities in the sourcing, use and exploitation of managerial and technological innovations

Abstract

This paper explores patterns of both managerial and technological innovations, how they interact, and their relationship with firm performance. Parallels between managerial innovations and investments in intangibles are highlighted. Using a data set relating to 1497 UK enterprises in 2009 with a special emphasis upon non-manufacturing, it is shown that firms both source and use technological and managerial innovations and different types thereof simultaneously, suggesting widespread complementarities across innovations. Factor analysis is used to generate combined indicators of firms’ overall efforts in both sourcing and using different innovations and enables their allocation to clusters. The most active sourcing and using clusters are the smallest, whilst the least active sourcing and using clusters are the largest. Firm characteristics differ across both sourcing and using clusters in expected ways. Further, (i) there is a positive relationship between corporate performance and the intensity of both sourcing and using innovations, and (ii) firms undertaking technological (managerial) innovation experience greater improvement in sales growth if they also undertake managerial (technological) innovation. The findings indicate that reliance upon either technological or managerial indicators of innovation alone could be misleading in terms of both the extent of innovation and the impacts of different types of innovation upon firm performance. policy implications are drawn.