Relationship between innovation and business performance

Abstract

The analysis of professional literature shows that many businesses measure innovation performance based on a combination of input and output indicators. The results of comparison confirmed that there are many concepts in innovation performance measurement, but they are not consistent. In scientific practice, there are also opinions that studies on indicators of innovation performance measurement are inadequate. The results indicate that most of the indicators are input-oriented and only few indicators are outputoriented. Businesses face difficulties when establishing a clear relationship between business innovation and its performance. When measuring innovation performance, there is a serious problem with a significant delay of the benefits of innovation and the complexity of the isolation of the role of innovation from other business activities with respect to the overall performance. Measuring innovative business performance can be achieved by financial indicators such as ROE, ROI and by non-financial indicators such as the number of new ideas, products, and so on. The paper aims to compare the development of innovation in the selected sector and the development of the sector's financial indicators for the identification of indicators whose development most closely corresponds to the development of innovation.