Innovation dimensions and business performance under environmental uncertainty

Abstract

Purpose The purpose of this paper is to examine the impact of the dimensions of innovation on manufacturing firm performance taking into consideration the moderating role of environmental uncertainty among these relationships. Design/methodology/approach A research study was carried out using a sample of 580 Greek manufacturing firms. Exploratory and confirmatory factor analyses were applied to extract and validate the latent factors. K-means cluster analysis was also applied in order to group the responding firms. Finally, the structural relationships among the latent factors were determined through structural equation modeling. Findings According to the study findings, only three dimensions of innovation performance directly contributes to business performance. Moreover, this paper shows the differential effects of firm innovativeness on business performance under the influence of environmental uncertainty. Research limitations/implications The sample of the responding firms which is limited to the Greek manufacturing sector and the subjective business evidence coming from only one firm representative constitute the main limitations of the present study. Practical implications Firms can properly manage innovation dimensions. In case of high uncertainty, they should focus on product, marketing and process innovation, while in case of low uncertainty the focus should be on process, organization and product innovation. Originality/value Based on the multi-dimensional structure, this empirical study determines the contribution of innovation performance to business performance taking into consideration the role of environmental uncertainty as moderator on this relationship.