Firm Innovation Research Articles

Mandated gender-diversity policy and firm innovation

ABSTRACT We propose a theoretical model revealing that ‘mandated diversity’ policies increase the representation of women and minorities but lead to a decrease in firm innovation. This argument is supported by empirical evidence from countries with hard gender quotas.

Advancing green innovations in pharmaceutical firms towards societal development: nurturing customers' health and building loyalty

Advancing green innovations in pharmaceutical firms towards societal development: nurturing customers' health and building loyalty

Don’t let your customers slip away: exploring the impact of perceived firm innovativeness on customer’s switching intention in transitioning market

Purpose The purpose of this study is to examine customer switching behavior in transitioning market structure. Drawing upon stimulus-organism-response theory, this study explores the impact of perceived firm attributes on customer switching intention, examines the mediating role of customer satisfaction in this dynamic and assesses the moderating effects of relationship depth and switching cost. Design/methodology/approach This study used a cross-sectional research design and a quantitative research approach. Data was collected through surveys from a conveniently selected sample of 380 telecom service users. The collected data were analyzed using confirmatory factor analysis to validate the measurement model and PROCESS macro models 2, 4 and 10 to test the hypothesized relationships. Findings The findings confirmed that perceived firm innovativeness significantly influences customer switching intention. In addition, customer satisfaction mediates the relationship between firm innovativeness and switching intention, while perceived switching costs and relationship depth moderate this relationship. Practical implications The findings highlight how perceived firm innovation shapes customer switching intentions, suggesting that firms can reduce switching by investing in innovation and managing switching costs and relationships effectively. Originality/value This study provides unique insights by examining firm innovativeness from the customer’s perspective and analyzing its impact on switching behavior within a transitioning market.

What innovation and technology delivers to internationalization? The case of European and Central Asia regions

Purpose This study aims to analyze the impact of technology and innovation on businesses’ internationalization process as well as the relationship between innovation and technology and internationalization. Design/methodology/approach The study was based on quantitative analysis of secondary data from 30 economies in Europe and Central Asia, extracted from the Enterprise Surveys – The World Bank database, using the multivariate statistical techniques of multiple linear regression and cluster analysis. Findings The results suggest that innovation and technology (I&T) mutually and positively influence the internationalization of firms. In this sense, innovative firms are more successful in competing internationally and exposure to alternative business contexts culminates in innovation. The results suggest a positive relationship between the percentage of firms that introduced a process innovation, the percentage of firms with websites and the businesses’ internationalization. Originality/value The originality of this research is based on the methodological approach that allowed the identification of the most significant variables for stimulating the internationalization of firms based on innovation and technology. Given the predominance of economies with higher I&T and internationalization in Europe, it is proposed as future research projects to ascertain the reasons for such a phenomenon.

Balancing Supply Chain Ambidexterity and Performance: The Impact of Firm Innovation in Selected Manufacturing Companies in the Greater Accra Region of Ghana

Balancing Supply Chain Ambidexterity and Performance: The Impact of Firm Innovation in Selected Manufacturing Companies in the Greater Accra Region of Ghana

Managing the tensions between tradition and innovation in family firms

PurposeThis study explores the relationship between innovation and tradition in family firms. By examining how these firms manage the potential tension between these two elements, the study aims to understand better how innovation and tradition coexist and support long-term survival across generations.Design/methodology/approachThis study has a constructivist standpoint and follows a qualitative methodology. By conducting a comparative case study, the data are collected from semi-structured interviews with 10 participants in 4 case companies located in Sweden. The data are analysed using thematic analysis.FindingsThis study found that managing the tension between innovation and tradition is carried out through four mechanisms: forward thinking through heritage, paradoxical thinking, operational control and governance. Moreover, the study further shows the great importance of the concept of intergenerational learning in family firms in managing tension.Originality/valueThe findings from this study contribute to the existing literature in family firms concerning managing tradition and innovation by providing a novel conceptualisation of the mechanisms embedded in this process. Moreover, the article proposes a grounded model, which could be used in research and practice when dealing with similar issues.

Toward an improved causal test of network effects: Does alliance network position enhance firm innovation?

AbstractResearch SummaryAssessing whether network position causes firm outcomes is difficult because networks result from firms' strategic choices. To address this issue, we develop a research design that separates self‐driven network change from other‐driven change. Because other‐driven change suppresses the focal firm's agency, outcomes resulting from it can be interpreted as causal—under verifiable assumptions. We apply this method to reassess whether alliance network position affects firm innovation. Using data from the biotechnology industry, we find that structural holes (but not closure) increase firm innovation when self‐driven network change is involved but not when other‐driven change is involved. This raises two possibilities: network effects spuriously capture unobservable firm characteristics or network theories must be updated to account for agency.Managerial SummaryWe examine a crucial question for managers making decisions about alliance networks: Does a firm's position in its alliance network drive innovation, or is it a reflection of the firm's inherent qualities? Our research explores this question by examining network changes outside a firm's control. We find that bridging disconnected partners (structural holes) enhances innovation, but only when firms actively create these positions and not when these positions result from others' actions. Our findings suggest that network position alone does not drive innovation. Acknowledging that network position, per se, is not advantageous provides nuanced insight to better guide managerial decisions.

Does Contractionary Monetary Policy Decrease Firm’s R&D Investments? Evidence from India’s Demonetisation

On 8 November 2016, the Indian Government demonetised ₹500 and ₹1,000 notes, which made nearly 86 per cent of the cash-in-circulation illegal tender overnight, with new ₹500 and ₹2,000 notes introduced gradually over the next several months. We exploit this intervention in a propensity score-matched difference-in-differences (PSM-DiD) framework to isolate the implications of a contractionary monetary policy on firm’s research and development (R&D) investments. Our findings suggest that India’s demonetisation policy had a detrimental effect on firm innovations in the period following its implementation. Additionally, we observe a concentration of this effect among slower-growth, less-profitable and more-leveraged firms. JEL Codes: E51, E52, O30

Untangling the Interplay: Interfirm Alliances, University-Industry Collaboration, and Firm Innovation

Untangling the Interplay: Interfirm Alliances, University-Industry Collaboration, and Firm Innovation

Effective practice of innovative leadership with constant changes in social and cultural norms in China

ABSTRACT Maintaining competitiveness is crucial for firms to survive with increasing global competition. One of the key elements for maintaining competitiveness is the development of innovative leadership. The dynamic business operations of firms require leadership capabilities in general, and innovative leadership capabilities in particular, for achieving long-term survivability. This research adopts a holistic approach to investigate multiple factors that influence firm innovation through the effective practice of innovative leadership with constant changes in social and cultural norms in China. We have based our research on observations of three case studies in China and in-depth interviews conducted with key informants. This study contributes to redefining innovative leaders and innovative leadership. We illustrate the contextual factors that influence the adoption and practices of innovative leadership. We also identify crucial aspects of the quality of leaders and the engagement between leaders and subordinates that determine the outcomes of implementing innovative leadership. These aspects influence firms’ innovative capabilities and the effective practice of innovative leadership in the transitional economy of contemporary China.

Cultural diversity and bank credit allocation

ABSTRACT This research explores the relationship between regional cultural diversity and bank lending to innovative firms. Ordinary Least Squares results reveal that banks in culturally diverse areas are more likely to lend to innovative businesses compared to those in less diverse regions. This relationship holds when using the number of mountains as an instrumental variable estimator. The effect is stronger in regions with greater cultural inclusiveness, more effective formal institutions, or more stable economic policies. Additionally, banks enhance financial performance without compromising loan quality through this lending approach. Overall, the findings highlight the crucial role of cultural diversity in shaping lending relationships.

Family CEO and radical innovation: A stewardship perspective

This article integrates the literature on radical innovation, the stewardship perspective, and family business research to develop and test a model examining the influence of a family CEO and the CEO's generational stage on radical innovation, considering different types of family CEOs as distinct manifestations of strategic leaders' stewardship behavior. Furthermore, building on the notion of “doing more with less”, we propose and empirically test the notion of “doing better with less”—specifically, whether the presence of a family CEO enhances the pursuit of radical innovation under resource constraints (i.e., with lower R&D intensity). Using longitudinal data over an 11-year period from 227 listed firms in the automotive and pharma/biotech industries from 29 countries, we find that firms led by a family CEO, especially those led by descendants, excel at radical innovation. Descendant-led firms are also better at radical innovation with lower R&D intensity, suggesting they do better with less. That is, our study shows that family CEOs at a later generational stage serve as catalysts for radical innovation, even under resource constraints. In addition to implications for theory and practice, our findings offer a more advanced understanding of the strategic leadership-innovation relationship in terms of distinct manifestations of stewardship behavior for radical innovation in firms with family leadership.

The Impact of Institutional Orientation on Export Performance: Mediating Role of Firm Innovativeness

ABSTRACTIn international marketing research, innovativeness is usually considered as an important element for firms that adopt an export orientation and that wonder about their success in foreign markets. It might help exporters to better ensure their international orientations. This study aims to test the relationship between institutional orientation, innovativeness, and export performance. It also aims to test the mediating effect of innovativeness in the relationship between institutional orientation and export performance. For this reason, a questionnaire was administered to 260 exporting companies. Results show that institutional orientation has an effect on export performance, especially through its dimension “conformity.” They also show that innovativeness can mediate the link between institutional orientation and export performance.

Founder resources and innovation investment: A configuration perspective

Based on the theory of resource bricolage, this study adopts the method of fuzzy-set qualitative comparative analysis (fsQCA) to explore the multiple interaction mechanisms of the founder’s internal powerful resources (knowledge resources, management rights resources, and control rights resources) and external relationship resources (political relations resources and social relations resources) on firm innovation investment. The main findings are as follows: (1) the five key resources of founders can’t contribute to the result of high firm innovation investment alone, but they can play a role together through arrangement and management, resulting in “resource synergy” effect; (2) the internal-external resource combination of founders can be divided into two paths: “internal-driven” and “internal-external matching”, and each path contains different ways of resource combination, however, the “external-driven” path does not exist; (3) according to the analysis of configuration, it is found that compared with the external relationship resources, the founders pay more attention into cultivating internal powerful resources is more conducive to the improvement of the level of firm innovation investment; (4) the external political relationship resources of the founder play a supplementary role in firm innovation decision-making with all paths. This study shows that the value of founder resources comes from the combination management of internal and external resources. From the perspective of configuration, this study studies the relationship between founders’ individual resources and firm innovation investment, which provides a new idea for the research of firm innovation field

The Influence of Urban New Energy Development Orientation on New Energy Technology Innovation in Firms

Unlike existing energy policies that adopt a macro-level perspective, this paper examines the impact of China’s new energy demonstration cities (NEDC) policy on micro-agents. Using longitudinal data covering Chinese publicly listed firms in new energy industries, the empirical results show that the NEDC policy significantly increases firm’s new energy patents in pilot cities compared to those in non-pilot cities. We examine the potential channels via industrial upgrading effect, relative scale effect, direct incentive effect, and factor aggregation effect. In addition, we find that the NEDC policy performs better in areas with more governmental new energy attention and higher infrastructure levels, and state-owned businesses are more proactive.

Legal infrastructures for firm innovation: Effects of intellectual property protection in the era of digital economy

Legal infrastructures for firm innovation: Effects of intellectual property protection in the era of digital economy

The government's environmental attention and corporate green innovation: A threshold analysis and quantile regression approach.

Based on an analysis of 643 listed firms in clean technology sectors, this study explores the nonlinear impact of the government's environmental attention (GEA) on firms' green innovation by exploiting threshold and quantile regression techniques on Stata 17. We show that a double threshold exists when the level of the GEA is 51 or 104, above which the positive impact of the GEA on green innovation in cleantech firms significantly diminishes. The results from the quantile regression further indicate that cleantech firms receive almost no benefits from the GEA at lower levels of green innovation. Thus, policy-makers designing environmental policies should consider that the marginal benefit of environmental attention on green innovation wanes beyond certain levels, especially for firms that lack sufficient enthusiasm for innovation.

Overcoming Financial Constraints on Firm Innovation: The Role of R&D Human Capital

This paper examines how R&D human capital can mitigate the negative effects of financing constraints on firm innovation, using survey data from 4000 South Korean manufacturing firms. The results confirm that financing constraints are generally associated with lower levels of product innovation. However, firms with stronger R&D human capital—measured by higher education levels and a larger proportion of R&D employees—are better able to overcome these financial barriers. Moreover, the positive moderating effect of R&D human capital is significantly enhanced in firms with an entrepreneurial culture, which supports risk-taking and innovation. These findings underscore the importance of investing in intangible assets, such as human capital and fostering a culture of entrepreneurship to sustain innovation during periods of financial distress. Policymakers should consider expanding financial support for R&D activities, particularly for small and medium-sized enterprises (SMEs) that face higher costs of capital. This study contributes to the literature by using direct measures of financial constraints and highlighting the role of human capital in innovation, especially in financially constrained environments.

Financial Constraints and Firm Innovation Decision: The Roles of Corporate Governance and Risk Diversification

ABSTRACT Firm innovation decision is subject to the influence of financial constraints, but the mechanism through which this impact occurs remains unclear. Using a nationwide representative survey data set of private firms in China in 2016, we first identified the strengthening effect of financial constraints on firm innovation decision, and further demonstrated the influence of corporate governance and risk diversification on such a relationship. The results show that firms tend to increase investment in innovation to improve operations when facing tighter financial constraints. Firms with suboptimal corporate governance and better conditions of risk diversification tend to adopt riskier innovation strategy to cope with tighter financial constraints.

Innovation Concentration and Patent Market Structure

Two empirical facts concerning the increase in innovation concentration levels of U.S. industries over the last two decades have been established: innovating firms with larger market shares invest more in R&D and enter into more industries. This paper presents a model of an imperfectly competitive patent market with heterogeneous firms to show that R&D itself increases industry concentration. In the context of an imperfectly competitive patent market structure, firms generate endogenous variable markups. In particular, the price of firms' newly invented knowledge, the profit and survival rate of the innovating firms depend on the market share of the knowledge stock. Firms pay a random fixed cost in each period which together with market share determine the decision on whether to innovate in different sectors. Firms enter different sectors sequentially: they start developing new varieties in a sector with minimal competition, building up private knowledge, and then venturing into other sectors using R&D investment and accumulated knowledge. Finally, we prove that the stationary firm innovation size distribution exhibits a Pareto tail in the steady state.