INNOVATION DECISION OF EXPORT COMPANIES AND EFFECT ON FIRMS FINANCIAL PERFORMANCE

Abstract

Innovation is a very important subject for companies especially for developing new products, finding new methods of production, satisfying the consumers’ needs, decreasing costs and gaining competitive advantage. Companies can survive by the help of innovation improvement because that it provides continuous progress, which enables companies to grow faster, become more efficient and more profitable than companies, which do not make innovation. Particularly for exporting companies’ innovation gains much more importance because of shortening product life cycle and increasing competition in global environment. There are numerous studies that investigates the relation between innovation and firm performance. Research results have shown that innovation influences firm performance in different ways such as; entering the market for the first time with an innovative product allow companies to obtain relatively high profits; the number of innovations completed by companies had a positive impact on the operating profit margin; high product innovativeness had positive affect on the sustainable profitability in longitudinal researches; companies’ technical and administrative innovation have also positive affect on firm performance. Therefore, due to the higher uncertainty in business environment, it is crucial to identify the criteria for innovation decision and analyze the effects on firms’ financial performance. In this study, main objective is to find out the most important criteria for innovation decision that affects financial performance in Turkish export companies. The authors identified the innovation decision criteria according to the recent studies that explore the relation between innovation and firm performance. Decision model consists of three main criteria as; firm structure, economic and internal environment criteria and nine sub-criteria as; experience, financial structure, crisis & instability, market demand, governmental policies, competition, human capital & education, research & development capability and organizational culture. Analytical Network Process (ANP) method used to select the best alternatives evaluated with respect to nine criteria