Relationship between innovation and firm performance and the role of strategic orientations

Abstract

Purpose The purpose of the present paper is to analyse the impact of entrepreneurial orientation (EO) and customer orientation (Co.) on innovation in the restaurant industry, as well as how innovation also positively influences financial and market performance. Likewise, it is analysed whether human capital (HC) and competitive strategy (CS) have a moderating effect between innovation and performance. Design/methodology/approach To reach the stated goals, a survey was applied to 129 entrepreneurs in the restaurant industry in Baja California, Mexico and using partial least squares structural equation modelling, the research hypotheses were verified. Findings Results indicate that EO and Co positively influence innovation, which also furthers better financial and market firm performance; however, no moderating effect was found for HC nor CS. Practical implications The findings allow contributing from a practical-entrepreneurial standpoint, as it raises awareness about the importance of developing strategies that allow efficiently gaining knowledge to encourage a culture in the restaurant industry focused on EO and Co, which, for their part, will boost the design and implementation of innovations. Social implications The paper contributes to understanding the behaviour of HC and CS, which may have an influence or not, depending on the role they have within a system. Originality/value This paper contributes to raising awareness of the importance of developing strategies that allow efficient knowledge to foster a culture in the restaurant industry focused on entrepreneurship and clientele.