Innovation Configurations and Firm Performance: An fsQCA Approach

Abstract

Emerging research has unraveled complementarities between certain innovation forms, of product, process and organizational innovations. However, there is little consensus on how various innovation configurations and key institutional contexts and characteristics might interact to lead to superior or inferior performance. The aim of this paper is to investigate which sets of innovation configurations empower firms to attain greater performance given key institutional contexts (regulatory intensity and knowledge- vs. research-intensity of industries) and firm characteristics (firm size). We argue that innovation is a causally-complex phenomenon characterized by multifaceted interdependencies and equifinality. We employ the German Community Service Innovation survey, which consists of a broad array of innovation-related questions. We utilize the fuzzy-set qualitative comparative analysis, a set-theoretic configurational method that enables discovering complex patterns in a simultaneous and iterative processes. We find that in lightly-regulated industries, successful firms largely conform to product-marketing and process-organizational innovation pairings. Crucially, regulation demands high-performing firms to supplement these pairings with a third, i.e. respectively organizational or product, innovation form; The exception being small service firms who need to focus on one organizational form.