Organizational innovation as an enabler of technological innovation capabilities and firm performance☆
Introduction
Organizational innovation (OI) is the introduction of new organizational methods for business management in the workplace and/or in the relationship between a company and external agents (OECD, 2005). OI currently represents one of the most important and sustainable sources of competitive advantage for firms because of its context-specific nature (Hamel, 2006, February, Hamel, 2007, Hamel, 2009). However, OI remains poorly understood (Hamel, 2006: 82).
Few conceptual and methodological contributions address the monitoring of OI (Armbruster, Bikfalvi, Kinkel, & Lay, 2008: 645). The number of studies on OI development (Armbruster et al., 2008, Birkinshaw et al., 2008, Hamel, 2006, February, Hamel, 2007, Hamel, 2009) and the factors that promote this development (Battisti and Stoneman, 2010, Birkinshaw and Mol, 2006, Mol and Birkinshaw, 2009) have increased in the last few years. However, few studies report on the consequences of OI (Damanpour & Aravind, 2011), and those that do are limited in scope (Mol & Birkinshaw, 2009: 1270). The present study addresses this issue through analysis of: (1) the effect of OI on the generation of technological product and process innovation capabilities (IC); and (2) the impact of OI and technological IC on firm performance (FP).
The present study expands current knowledge on OI in two ways. First, Damanpour and Aravind (2011) encourage research on the effect of OI on technological IC. To date, the main arguments identifying OI as a prerequisite for technological IC stem from reports on organizational change published in the 1950s (Lawrence, 1954, Lewin, 1958). Although there are more recent reports showing a direct correlation between these types of innovation (Damanpour and Evan, 1984, Kimberly and Evanisko, 1981), few studies extend the original reasoning (Damanpour, Szabat, & Evan, 1989). The importance of both organizational and technological innovation has only been shown very recently, but has as yet little advanced our understanding of the connection between them (Battisti and Stoneman, 2010, Damanpour, 2010, Damanpour et al., 2009). The present study contributes to an understanding of the association between OI and technological IC and supports the hypothesis that while OI is a positive factor in the development of process IC, its effect on product IC is mediated by process IC. This is an important issue in strategic management given that innovative activity is an important source of sustainable competitive advantage (Damanpour and Schneider, 2006, Damanpour and Wischnevsky, 2006). Identification of internal factors that stimulate technological IC can promote a better understanding of the innovative process within a firm (Galende & de la Fuente, 2003) and will enable advancement of the study of the interrelationship between innovation types and IC (Damanpour, 2010).
Second, as Mol and Birkinshaw (2009: 1270) state, “The literature offers very little evidence of the empirical relationship between the introduction of new management practices and FP”. Consequently, debate on the impact of OI on FP is ongoing, with one side maintaining that OI has a positive effect on FP (Armbruster et al., 2008, Mol and Birkinshaw, 2009) and is an essential source of competitive advantage (Hamel, 2009) and the other maintaining that its existence has a weak effect on FP (Cappelli & Neumark, 2001). This paper sheds light on this question by building on the stream of research that proposes that OI positively affects FP.
Furthermore, unlike previous research, this study specifically considers how product and process IC separately affect FP and how they interrelate to achieve a positive effect on FP. This research question is important because provides a better understanding of how firms benefit from these two types of technological IC to obtain superior FP. Until now, the impact of product and process IC on FP has mainly been studied by considering both of them in a construct (Calantone et al., 2002, Tsai, 2004) and this paper tries to shed light on whether they provide the same (or different) results for a firm considering them separately.
The structure of the remainder of the article is as follows. Section 2 includes a review of relevant literature and a sound theoretical model of the relationships among OI, technological IC, and FP. Section 3 describes the procedures used to test the hypotheses. Section 4 comprises the results of the analysis. The discussion and conclusions with academic and practical implications follow in Section 5.
Section snippets
Resource-based view (RBV) of innovation
Among numerous classifications of types of innovation, one of the most commonly accepted is that of the OECD (2005) in the Oslo Manual, which distinguishes four types of innovation: product innovation, process innovation, marketing innovation, and OI. Technological innovation involves product and process innovations, while non-technological innovation involves marketing and organizational innovations. This paper focuses on all of the types identified by the OECD (2005) except for marketing
Sample population
In this paper, the empirical study was undertaken by Spanish industrial companies. The contact information was obtained by the Sistema de Análisis de Balances Ibéricos (SABI) database, which offers identification and financial data of Spanish industrial companies. The following prerequisites were included in the population under study: First, the availability of complete contact details was necessary. Second, the population excludes the energy sector and micro-businesses (companies with < 10
Results
Analysis of a PLS model comprises two stages: (1) assessment of the measurement model; and (2) testing of the structural model.
Theoretical implications
The two main objectives of the present study are: (1) to study the relationship between OI and technological IC; and (2) to analyze the effect of OI and technological IC on FP. Given the relatively new significance of OI in academic studies and the recent interest in the interrelationships among innovation types and FP, existing studies do not provide conclusive results on these questions. This is mainly because of inconsistencies in the perception and use of the OI concept (Damanpour &
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This research was financially supported by research funding from the Spanish Ministry of Science and Innovation (ECO2009-1252) and from the Consellería de Educación of the Generalitat Valenciana (ACOMP/2010/233). Also, the authors thank the three anonymous reviewers for their excellent suggestions. Comments by Fariborz Damanpour, Rutgers University, Newark, United States, Mariano Nieto-Antolín, Universidad de León, León, Spain, and Pedro López-Sáez, Universidad Complutense de Madrid, Madrid, Spain, to an earlier draft were helpful in revising this paper.