Abstract
The ability to innovate is essential for achieving a competitive position, and digital innovations have become one of the main drivers of competitive advantage. The factors that affect the degree of innovation (innovation efforts, competitive priorities, market strategy, the internal organisational atmosphere) impact the financial performance of insurance companies considering the market conditions. In order to shed some light on that research gap in post-transition countries, survey research has been conducted on a sample of insurance companies in the Republic of North Macedonia. The results obtained from the structural equation modelling analysis, which seeks to determine the structural relationship between the measured variables and the latent constructions, reveal positive effects of innovation performance on the profitability of insurance companies.
Highlights
Insurance is a complex mechanism that plays an essential role in every economy
The results obtained from the structural equation modelling analysis, which seeks to determine the structural relationship between the measured variables and the latent constructions, reveal positive effects of innovation performance on the profitability of insurance companies
Given the fact that there is a lack of research examining the relationship between innovation capability, types of innovation and financial performance of insurance companies, this paper aims to establish a more outstanding balance and empirically-based picture of innovation activities in the service sector, with a particular emphasis of the insurance industry
Summary
Insurance is a complex mechanism that plays an essential role in every economy. Insurance is a mechanism by which the risk of loss or damage on the part of the insured is transferred to the insurer in exchange for a known amount in advance (premium). Most studies investigate the relationship between innovation types and innovation performance, mainly in the manufacturing sector (Gunday et al, 2011; Kalay & Lynn, 2015). Studies related to the service sector often determine the relationship between the company’s business strategies and innovative activities (Lilly & Juma, 2014; Akman & Yilmaz, 2008). Given the fact that there is a lack of research examining the relationship between innovation capability, types of innovation and financial performance of insurance companies, this paper aims to establish a more outstanding balance and empirically-based picture of innovation activities in the service sector, with a particular emphasis of the insurance industry. Insurance innovations are related to the product, market, process, or organisation (Deloitte, 2012; Schaerer et al, 2011). Some studies examine unique types of innovation, such as process innovation (Abrunhosa & Moura E Sá, 2008) or product innovation (Prajogo & Sohal, 2004), while others explore the process and product innovation (Martinez-Costa & Martinez- Lorente, 2008)
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