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

Abstract

ABSTRACT This paper is primarily concerned with how managerial and technological innovations interact, and their relationship with firm performance. Parallels between managerial innovations and investments in intangibles are highlighted. Using an existing data set relating to 1497 UK enterprises in 2009 with an emphasis upon the service sector, it is shown that firms both source and use managerial and technological innovations and different types thereof simultaneously, suggesting widespread complementarities. 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 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 managerial or technological indicators of innovation alone could be misleading in terms of both measuring the extent of innovation and the impacts of different types of innovation upon firm performance.