Effects of innovation on performance of business organizations
Innovation dimensions including product innovation, process innovation, organizational innovation, and marketing innovation have been shown to affect the performance of business organizations in various ways, including increased market share, increased competitive strength, increased profitability, and reduced cost of production.
The following are empirical studies on the effect of innovation on organizational performance from different parts of the globe.
This study examined the impact of green innovation on SMEs’ performance in the food and beverage sector in Bandar Lampung City. The objectives of the study included the following: to determine the effect of green product innovation on SME performance in target enterprises and to assess the effect of green process innovation on SME performance in target enterprises. The target population included 100 SMEs from the study location. A sample size of 790 participants was selected to participate in the study. Data collection was done using a questionnaire. The collected data was analyzed using descriptive statistics, including frequency and percentage. Regression analysis was done to determine the effect of the independent variables on the dependent variable. The analyzed data was presented using tables as required (Natalie et al., 2024).
The results of linear regression indicated that green product innovation contributed to 9% variance in the performance of target SMEs. In addition, the results showed that green process innovation contributed to 31.3% variance in the performance of target SMEs. The results of the coefficient of determination test indicated that both product innovation and process innovation collectively contributed to 12.6% variance in SME performance in the study location (Natalie et al., 2024).
This study examined the effects of innovation types and customer participation on performance of healthcare service providers in Sweden. The specific objectives of the study included the following: to assess the effect of technological innovations (TI) on external effectiveness (EE) of the target firms; to assess the effect of technological innovations (TI) on internal efficiency (IE); to establish the effect of non-technological innovations (NTI) on external effectiveness (EE); to establish the effect of non-technological innovations (NTI) on internal efficiency (IE); to explore the mediating effect of non-technological innovations on the relationship between technological innovation (TI) and external effectiveness (EE); to explore the mediating effect of non-technological innovations (NTI) on the relationship between technological innovation (TI) and internal efficiency (IE); to determine the mediating role of customer participation on the relationship between technological & non-technological innovations and external effectiveness (EE); to determine the mediating role of customer participation (CP) on the relationship between technological & non-technological innovations and external effectiveness (Samuelsson, 2023).
The target population included 941 public and private primary healthcare units in Sweden. 241 primary healthcare units were selected for the study. A sample size of 241 respondents was selected to participate in the study. Data collection was done using a questionnaire. The collected data was analyzed using descriptive variables including frequency and percentage. Regression analysis was employed to assess the effect of independent variables on the outcome variables. The findings were presented in tables accordingly (Samuelsson, 2023).
The results of regression analysis indicated the following: technical innovations had a positive and significant effect on external effectiveness; non-technical innovations had a positive and significant effect on external effectiveness; technical innovations had an insignificant effect on internal efficiency; non-technical innovations had a positive and significant effect on internal efficiency; non-technological innovations played a mediating role in the relationship between technical innovations and external effectiveness; non-technological innovations did not play a mediating role in the relationship between technological innovations and internal efficiency; customer participation played a mediating role between technical and non-technological innovations and external effectiveness; and lastly, customer participation did not play a mediating role between technical and non-technical innovations and internal efficiency (Samuelsson, 2023).
This study investigated the impact of innovation on the performance of technology companies in Jordan. In particular, the study aimed at achieving the following objectives: to establish the effect of organizational eco-innovation on the performance of Jordanian technology firms; to explore the effect of green product innovation on the performance of Jordanian technology firms; and lastly, to examine the effect of service innovation on the performance of Jordanian firms (Raya, 2022).
The target population included 7 technology firms registered by the Amman Chamber of Industry and Commerce in Jordan. Consequently, 200 staff members from the target companies were chosen to participate in this study. These included first-line employees and managers. Data collection was accomplished using a questionnaire. The collected data were analyzed using descriptive statistics, including frequency, percentage, mean, and standard deviation. Correlation analysis was done to determine the relationship between variables under investigation. Regression analysis was employed to establish the effect of independent variables on the dependent variable. The results were presented in tables as deemed appropriate (Raya, 2022).
The findings of correlation analysis indicated the following: organizational eco-innovation had a positive and significant association with the performance of technological firms in Jordan; service innovation had a positive and significant association with the performance of technological firms in Jordan; and last but not least, green product innovation had a positive and significant association with the performance of technological firms in Jordan (Raya, 2022).
The results of regression analysis revealed that 69.4% of the variance in the performance of technology firms in Jordan was explained by the combined effect of the independent variables, that is, organizational eco-innovation, service innovation, and green product innovation. More specifically, the results of the regression standardized coefficients indicate that when all factors are maintained at a constant, organizational eco-innovation contributed to 16.1% variance in performance of Jordanian technology companies, green product innovation contributed to 16.3% variance in performance of the target firms, and service innovation contributed to 58.2% variance in performance of the said firms. This means that, service innovation had the greatest impact on performance of target firms, compared to organizational eco-innovation and green product innovation (Raya, 2022).
The study assessed the impact of innovation types on the performance and competitiveness of Ivorian SMEs. In particular, the study aimed at achieving the following objectives: to determine the effect of product innovation on SME performance, to find out the effect of process innovation on SME performance, to establish the effect of organizational innovation on SME performance, and lastly, to assess the effect of marketing innovation on SME performance (Koffi et al., 2021).
The target population included all SMEs operating in four cities of Côte d’Ivoire, including Korhogo, Abidjan, Abengourou, and Man. A sample size of 500 respondents was selected to participate in the study. Data collection was done using a questionnaire. The collected data was analyzed using descriptive statistics such as frequency, percentage, mean, and standard deviation. The structural modeling equation was used to establish the effect of the independent variables on the dependent variable. The findings were presented in tables as required (Koffi et al., 2021).
The findings establish that product innovation had a positive and significant effect on SME performance; process innovation had a positive and significant effect on SME performance; organizational innovation had a positive and significant effect on SME performance; marketing innovation had a positive and significant effect on SME performance; and lastly, SME performance had a positive and significant effect on the competitive advantage of the SME. Overall, the findings indicated that the independent variables (product innovation, process innovation, organizational innovation, and marketing innovation) explained 66.3% of the variance in SME performance. In addition, the results revealed that SME performance explained 64.4% variance in competitive advantage (Koffi et al., 2021).
The study explored the impact of strategic innovations on the performance of manufacturing firms in Kwale County, Kenya. Specifically, the study sought to determine the effect of technological innovation on performance of the target firms; to find out the effect of product innovation on organizational performance; to assess the effect of market innovation on performance of the target firms; and lastly, to establish the effect of process innovation on performance of the target firms (Kiptoo & Koech, 2019).
The target population included manufacturing firms located in Kwale County. Data collection was done using a questionnaire. The collected data was analyzed using descriptive statistics, including frequency, percentage, mean, and standard deviation. Correlation analysis was used to show the association among the study variables. Regression analysis was used to investigate the effect of independent variables on the dependent variable. The findings were presented using tables (Kiptoo & Koech, 2019).
The findings of the correlation analysis study showed that technological innovation had a positive and significant association with the performance of manufacturing firms in Kwale County; product innovation had a positive and significant association with the performance of the target firm; process innovation had a positive and significant association with the performance of the target firms; lastly, market innovation had a positive and significant association with the performance of target firms (Kiptoo & Koech, 2019).
The results of regression analysis showed that 31.5% of the variance in the performance of manufacturing firms in Kwale County was caused by the combined effect of technological innovation, process innovation, product innovation, and market innovation. Specifically, the results of the regression standardized coefficients indicated that when all factors are held constant, technological innovation explained 7.5% variance in the performance of the target firms; product innovation explained 25% variance in the performance of target firms; market innovation explained 31.8% variance in the performance of target firms; and last but not least, process innovation explained 3% variance in the performance of target firms. This means that market innovation and product innovation had the highest impact on firm performance, while technological innovation and process innovation had the least impact on firm performance (Kiptoo & Koech, 2019).
This study explored the impact of technological innovations on the performance of government agencies in Kenya. In particular, the objectives of the study included the following: to determine the effect of system development enhancements on performance of target firms; to find out the effect of adopting digital tools on performance of target firms; to assess the effect of IT innovations on performance of target firms; and lastly, to find out the effect of integrating interdepartmental processes on performance of target firms (Mutie, 2018).
The target population included 94 government agencies operating in Kenya. A sample size of 94 respondents was selected to participate in the study. Data was collected using a questionnaire. Descriptive statistics, including frequency, percentage, mean, and standard deviation, were used to analyze descriptive variables. Pearson correlation analysis was used to explore the association between study variables. Multiple regression analysis was used to assess the effect of independent variables on the dependent variables. The findings were presented using tables as appropriate (Mutie, 2018).
The findings of correlation analysis revealed that system development enhancement had a positive and significant association with the performance of target government agencies; digital tools and services had a positive and significant association with the performance of target agencies; IT-based innovations had a positive and significant association with the performance of target agencies; lastly, interdepartmental process integration had a positive and significant association with the performance of target agencies (Mutie, 2018).
The results of regression analysis indicated that 75.9% variance in performance of governmental agencies in Kenya is caused by the predictor variables, that is, system development enhancement, digital tools and services, IT-based innovations, and interdepartmental process integration. In particular, the results of regression standardized coefficients showed that, when all factors are kept constant, system development enhancement contributed to 21.1% variance in agency performance; digital tools and services contributed to 28% variance in agency performance; IT-based innovations contributed to 26% variance in agency performance; while interdepartmental process integration contributed to 44.1% variance in agency performance (Mutie, 2018).
This study examined the impact of product innovation on the performance of the Nestle company in Nigeria. The specific objectives of the study included the following: to establish the effect of product innovation on profitability of Nestle Nigeria Plc; to find out the effect of product innovation on market share of Nestle Nigeria Plc; and to determine the effect of product innovation on competitive strength of Nestle Nigeria Plc (Onikoyi, 2017).
This was a case study research design. Respondents were thus drawn from the 2294 staff members employed in the company as of the time of this study. Consequently, using the stratified sampling technique, a sample size of 340 respondents was selected to take part in the study. A questionnaire was used to collect data from the respondents. The collected data was analyzed using descriptive statistics such as frequency, percentage, mean, and standard deviation. Pearson’s correlation was used to establish the relationship between product innovation and the competitive strength of the organization. Regression analysis was used to find out the effect of independent variables on the dependent variable (Onikoyi, 2017).
The findings of the regression analysis revealed that 21.1% variance in organizational profitability was caused by product innovation, whereas 18.1% variance in market share was explained by product innovation. On the other hand, the results of Pearson correlation analysis showed that there is a positive and significant association between product innovation and the competitive strength of Nestle Plc in Nigeria (Onikoyi, 2017).
This study explored the impact of innovation performance of medical laboratory firms in Nairobi City. The specific objectives of the study included the following: to determine the effect of records digitalization on the performance of the target medical firms; to find out the effect of digital marketing on the performance of target medical firms; to assess the effect of market training on the performance of staff in the target medical firms (Onyango, 2016).
The target population included 23 medical laboratory firms operating in Nairobi City. A sample of 69 respondents was picked to participate in the study. A questionnaire was used to collect data from the respondents. Descriptive statistics were used to analyze the descriptive variables of the study. Correlation analysis was used to explore the association between the variables under study. Regression analysis was used to assess the effect of independent variables on the dependent variables. The results were presented using tables as needed (Onyango, 2016).
The findings of correlation analysis indicated that digitalization of records had a positive and significant association with the performance of medical laboratory firms in the study location; digital marketing had a positive and significant association with the performance of the target firms; and lastly, marketing training had a positive and significant association with the performance of the target firms. The results of regression analysis indicated that 36.3% of the variance in the performance of medical laboratory firms in Nairobi City. In particular, the findings of the regression standardized coefficients showed that when all factors are held constant, digitalization of records contributed to 37.0% variance in performance of the target medical firms; digital marketing contributed to 20.4% variance in performance of the target firms; and finally, digital training was shown to have a 28.1% variance in performance of target firms (Onyango, 2016).
The study explored the effect of organizational innovations on the performance of SMEs in Delta State, Nigeria. The specific objectives of the study were two, that is, to determine the effect of resource acquisition on firm performance and to assess the effect of market orientation on firm performance. The target population included SMEs operating in the Delta State, Nigeria. A sample size of 150 staff members randomly selected from the target SMEs participated in the study. Data collection was done using a questionnaire. The collected data was analyzed using descriptive statistics, including frequency and percentage. Regression analysis was done to explore the effect of independent variables on the dependent variable. The findings were presented in tables as required (Orishede, 2023).
The results of regression analysis indicated that resource acquisition and market orientation contributed to 37.5% variance in the performance of the target SMEs (Orishede, 2023).
The study explored the impact of product innovation on the performance of manufacturing companies in Delta State, Nigeria. Specifically, the study addressed two objectives: to determine the effect of process innovation on firm performance and, secondly, to establish the effect of promotion innovation on the performance of target firms. The target population included manufacturing firms operating in Asaba, in the Delta State of Nigeria. A sample size of 180 respondents was selected to participate in the study. Primary data for the study was collected using a questionnaire. Descriptive statistics were done using frequency, percentage, mean, and standard deviation. Regression analysis was done to determine the effect of independent variables on the dependent variable. The results were presented in tables as required (Fidelia & Ogor, 2022).
The results of regression analysis showed that process innovation had a positive and significant effect on firm performance. In addition, the results showed that promotion innovation had a positive and significant effect on the performance of target firms (Fidelia & Ogor, 2022).
The study focused on the impact of product innovation on the performance of Taiwanese high-tech firms. The specific objectives of the study included the following: to establish the effect of product innovation on the performance of Taiwanese high-tech firms; to assess the relationship between product innovation and the use of managerial accounting information systems; and to determine the effect of using managerial accounting information systems on the performance of the target firm (Tsai et al., 2020).
The target population included 150 Taiwanese electronic firms listed on the Taiwan Stock Exchange Market and Over-the-Counter Market. 600 respondents (managers) were selected from the target population to participate in the study. Data collection was done using a questionnaire. Descriptive statistics, including frequency, percentage, mean, and standard deviation, were used to analyze descriptive variables of the study. Correlation analysis was used to examine the association between variables under investigation (Tsai et al., 2020).
The results of correlation analysis revealed that product innovation had a positive and significant association with the performance of target firms; there was a positive relationship between managerial accounting and firm performance; and the use of managerial accounting information systems had a positive and significant association with the performance of target firms. The results also revealed that managerial accounting information systems played a mediating role in the relationship between product innovation and firm performance (Tsai et al., 2020).
This study investigated the impact of innovation components on the performance of firms in Tehran, Iran. To be specific, the study addressed the following objectives: to find out the effect of service innovation on performance of target firms; to establish the effect of administrative process innovation on performance of target firms; and lastly, to assess the effect of technological innovation on performance of target firms. The target population included firms operating in the governorate of Golestan Province. A questionnaire was used to collect primary data. Data analysis was accomplished using frequency, percentage, mean, and standard deviation. A Structural Partial Least Square-Equation Modelling (PLS-SEM) model was used to determine the relationship between the variables under study. The results were presented using relevant tables as needed (Mehdi et al., 2020).
According to the results: all the independent variables (service innovation, administrative process innovation, and technological process innovation) had a positive and significant effect on the performance of target companies. The results of standardized coefficients showed that service innovation contributed to 99% variance in firm performance and administrative process innovation contributed to 85% variance in organizational performance, while technological process innovation also contributed to 85% variance in performance of target firms (Mehdi et al., 2020).
The study explored the impact of innovation capabilities and innovation types on the performance of the banking sector in Ghana. The specific objectives of the study included the following: to find out the effect of innovation capabilities on organizational innovation, product innovation, process innovation, and market innovation; to assess the effect of organizational innovation, product innovation, process innovation, and market innovation on the performance of target banks; and to examine the impact of firm performance on market performance and innovative performance (YuSheng & Ibrahim, 2020).
The target population included the banks operating in Ghana. Data collection was done using a questionnaire. The collected data was analyzed using descriptive statistics such as frequency and percentage. The bootstrapping technique was employed to determine the effect of the independent variables on the dependent variable. The results were presented in tables as required (YuSheng & Ibrahim, 2020).
The results of employing the bootstrapping technique showed that innovation capabilities had a positive and significant impact on organizational innovation, product innovation, process innovation, and market innovation; organizational innovation had a positive and significant impact on bank performance; product innovation had a positive and significant impact on bank performance; process innovation had a negative but significant impact on bank performance; market innovation had a positive and significant impact on bank performance; product innovation, process innovation, and market innovation predicted 64% variance in the performance of the bank; firm performance had a negative but significant impact on market performance; and firm performance had a negative but insignificant impact on innovation performance; (YuSheng & Ibrahim, 2020).
This study examined the impact of strategic innovations on the performance of ICT firms in Nairobi County. In particular, the study is set to achieve the following objectives: to find out the product innovation on performance of ICT firms in Nairobi County; to establish the effect of market innovation on performance of ICT firms in Nairobi County; to determine the effect of process innovation on performance of ICT firms in Nairobi County; and lastly, to assess the effect of organizational innovation on ICT firms in Nairobi County (Laban & Deya, 2019).
The target population included 14 ICT firms operating in Nairobi County. A sample size of 98 respondents was selected to participate in the study. Primary data was collected using a questionnaire. Secondary data was obtained from the records of targeted firms. The collected data was analyzed using descriptive statistics such as frequency, percentage, mean, and standard deviation. Regression analysis was done to establish the effect of the predictor variables on the outcome variable. The results were presented using tables as required (Laban & Deya, 2019).
The results of regression analysis showed that 28.6% variance in performance of the target ICT firms was caused by the combined effect of the predictor variables, including product innovation strategies, market innovation strategies, process innovation strategies, and organizational innovation strategies. In particular, the results of the regression standardized coefficients showed that when all factors are held constant, production innovation strategies contributed to 16.9% variance in performance of target ICT firms; market innovation strategies contributed to 21.9% variance in performance of target ICT firms; process innovation strategies contributed to 9% variance in performance of target ICT firms; and lastly, organizational innovation strategies contributed to 7.8% variance in performance of target ICT firms in Nairobi County (Laban & Deya, 2019).
The study explored the impact of process innovation on the performance of Etisalat Telecommunications Company, Nigeria. The specific objectives of the study included the following: to determine the effect of process innovation on the performance of the target firm and to assess the effect of process service modification on sales volume. The target population included employees of the Etisalat Telecommunications company in Nigeria. Data collection was done using a questionnaire. Descriptive statistics such as frequency, percentage, and mean were used to analyze the collected data. Regression analysis was employed to assess the effect of the independent variable (performance of target firm) on the dependent variable (process innovation). Pearson correlation was also employed to find out the association between process service modification and sales volume. The findings were presented in appropriate tables as required (Akpoviroro et al., 2019).
The results of regression analysis showed that 51.9% of the variance in the performance of the Etisalat Telecommunications company was caused by process innovation. In addition, the result of Pearson correlation showed that process service modification had a positive and significant association with sales volume (Akpoviroro et al., 2019).
This study investigated the impact of innovation on the performance of firms operating in Vietnam. The specific objectives of the study included the following: to determine the effect of product innovation on firm performance; to find out the effect of process innovation on firm performance; to establish the effect of marketing innovation on firm performance; and lastly, to assess the effect of organizational innovation on firm performance (Tuan et al., 2015).
The target population included 150 companies operating in Northern and Central Vietnam. A sample size of 150 respondents was selected to participate in the study. A questionnaire was used to collect data from the respondents. Descriptive statistics, for instance, frequency, percentage, mean, and standard deviation, were used to analyze descriptive variables of the study. Regression analysis was used to assess the effect of the independent variables on the dependent variables. Findings were presented in tables as required (Tuan et al., 2015).
The results of regression analysis demonstrated that product innovation had no statistically significant effect on firm performance, whereas process innovation, organizational innovation, and marketing innovation all had a positive and significant impact on firm performance. In particular, the results showed that the three variables explained 46.7% of the variance in the innovative performance of the target firms. The standardized coefficients showed that when all factors are left constant: product innovation had an insignificant influence on the innovative performance of target firms; process innovation contributed to 18.1% variance in the innovative performance of the target firms; marketing innovation contributed 8.6% variance in the innovative performance of target firms; while organizational innovation contributed 25% variance in the innovative performance of target firms (Tuan et al., 2015).
Citations
Akpoviroro, K.S., Amos, A.O., and Oladipo, A.O. (2019). The impact of process innovation on organizational performance. AUDCE, 15(2), 115-132.
Fidelia, I. and Ogor, M. (2022). Product innovation and organizational performance: the manufacturing industry perspective. International Journal of Economic Perspectives, 16(6), 21-36.
Kiptoo, L. and Koech, P. (2019). Effect of strategic innovations on organizational performance. The Strategic Journal of Business & Change Management, 6(2), 443-460.
Koffi, A.L., Hongbo, L., and Zaineldeen, S. (2021). Examining the impact of innovation types on Ivorian small and medium-sized enterprises’ (SMEs) performance and competitiveness. International Journal of Academic Research in Accounting Finance and Management Sciences, 11(1), 305-326.
Laban, O. and Deya, J. (2019). Strategic innovations and the performance of Information and Communication Technology firms in Nairobi, Kenya. International Journal of Academic Research in Progressive Education and Development, 8(2), 1-24.
Mehdi, T., Elahe, H., and Aidin, S. (2020). The effect of innovation components on organizational performance: case of the governorate of Golestan Province. International Journal Public Sector Performance Management, 6(6).
Mutie, A. (2018). Effect of technological innovations on organizational performance of government agencies in Kenya. Unpublished Master’s Thesis submitted to the School of Business, University of Nairobi.
Natalie, H.C., Bangsawan, S., Husna, N. (2024). Driving sustainable business performance: the impact of green innovation on food & beverage SMEs in Bandar Lampung City. International Journal of Business and Applied Economics, 3(3), 371-384.
Onikoyi, I.A. (2017). Impact of product innovation on organizational performance: a survey of Nestle Nigeria PLC. Journal of Marketing and Consumer Research, 37.
Onyango, E. (2016). Effect of innovations on the organizational performance of medical laboratory firms in Nairobi, Kenya. International Journal of Technology and Systems, 1(2), 30-50.
Orishede, F. (2023). Organizational innovations and firm performance. International Journal of Research and Scientific Innovation, 10(12).
Raya, A.L. (2022). The effect of innovation on organizational performance: a study in the Jordanian technology companies. Unpublished Master’s Thesis submitted to the Department of Management, LUISS, Jordan.
Tsai, M.H., Chang, J.H., Lin, Y.S., and Cheng, K.C. (2020). The impact of product innovation on performance: the influence of uncertainty and managerial accounting information systems. Munich Personal RePEc Archive, Paper No. 102828.
Tuan, N., Nhan, N., Giang, P., and Ngoc, N. (2015). The effects of innovation on firm performance of supporting industries in Hanoi, Vietnam. Journal of Industrial Engineering and Management, 9(2), 413-431.
YuSheng, K. and Ibrahim, M. (2020). Innovation capabilities, innovation types, and firm performance: evidence from the banking sector of Ghana. SAGE Open.
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