Linking organizational innovation, firm growth and firm size

Abstract

Purpose The purpose of this research is to study the effect of organizational innovation, in terms of the introduction of both new business practices and new methods of organizing workplaces, on firm growth, along with the moderating role of the firm size in this relationship. Design/methodology/approach A panel sample of 4,125 Spanish innovative firms taken from the Technological Innovation Panel for the period 2009 to 2014 was analyzed. Two-Step System-Generalized method of moments approach and instrumental variables approach with two-stage least squares have been used. Findings The findings remark the positive effect of organizational innovation on firm growth in case firms introduce both new business practices and new methods of organizing workplaces. Furthermore, the empirical evidences show that the firm size has a role, although partial, in moderating negatively the effect of introducing both new business practices and new methods of organizing workplaces on firm growth. Originality/value The study adds some new theoretical insights and empirical evidences into the literature related to the inertia theory in the perspective of the population ecology, incorporating it with the effect of firm size. Furthermore, the study may represent a further part of the complex literature puzzle that links organizational innovation to firm growth, and the inclusion of the moderating role of the firm size will partially provide a deeper understanding of this link.

Is Innovation a Driver of Sustainability? An Analysis from a Spanish Region

“…So, this affirmed that innovation is a driver of social sustainability. These results are consistent with other studies that also find a positive relationship between social sustainability and innovation [81,83,91]. Although we have evaluated social sustainability based on the generation of employment, a more in-depth and complete evaluation will require more metrics that allow us to appreciate the company's contribution to the social sustainability of the territory.…”

“…The first two hypotheses build on previous studies [81,85,86] insofar as they positively affect firms' growth. However, the posed hypotheses focus more on economic and social returns.…”

“…However, the posed hypotheses focus more on economic and social returns. The third and fourth hypotheses aim to go beyond the findings of Corsi et al [81] and Del Campo et al [83] by linking innovation and social responsiveness, insofar as firms take the dual consideration to make more economical and social profitability than those that are only considered innovative. Furthermore, the studies on which the first two hypotheses are based followed different methodologies, as explained in the next section.…”

“…From the theoretical framework, several studies have related innovation to the business world and territory with positive effects. There are works on innovation linked with business development, such as Corsi et al [81], which point out the positive effect of organizational innovation on companies' sales and productivity growth with a sample study of 4125 Spanish companies. Another notable work is that by Montégu et al [82], which found a correlation between competition and innovation after studying 1347 Chilean firms.…”

Impact of entrepreneur’s gender on innovation activities. The perspective of small businesses

“…At the same time, they suggest that R&D activities that are strategically important or that target radical innovation should be centralized, while R&D activities that are less strategically important and that are geared towards incremental innovation should be decentralized [ 75 ]. The size of the enterprise plays an important role in the organization of innovative activity—Corsi et al indicate that while small enterprises characterized by a high level of flexibility relatively easily adapt innovations to introducing organizational changes in order to improve their effectiveness, large enterprises face resistance related to the acceptance and integration of innovations [ 76 ]. However, it is worth noting that high-tech SMEs engage more in product development and process innovation, whereas non-high-tech SMEs tend to associate more in organizational and market innovations [ 77 ].…”