Academic journal article Innovation: Organization & Management

A Longitudinal Study of Innovation Competence and Quality Management on Firm Performance

Academic journal article Innovation: Organization & Management

A Longitudinal Study of Innovation Competence and Quality Management on Firm Performance

Article excerpt

Innovation and quality management practices are key means to sustaining competitive advan- tage. Both can be seen as valuable resources for building capabilities, promoting product and process practices, and enhancing performance gains. Innovation (Cho & Pucik, 2005; Naveh & Erez, 2005; Schumpeter, 1934) and quality management practices (Corbett, Montes-Sancho, & Kirsch, 2005; Naveh & Marcus, 2005) have been shown to benefit firms in which they oper- ate. Such empirical studies demonstrate the range of motives leading firms to undertake innovation and deploy well-managed quality practices.

Despite previous research on the relationships between innovativeness and performance of the firms (Atuahene-Gima, 1996; Kleinschmidt & Cooper, 1991; Naveh & Erez, 2005; Roberts, 1999; Subramanian & Nilakanta, 1996), and between well-managed quality programmes and various firms' outcomes (Corbett et ah, 2005; Corredor & Goñi, 2011; Lam, Lee, Ooi, & Lin, 2011; Talib, Rahman, & Akhtar, 2013; Terziovski, Power, & Sohal, 2003), little is known about asymmetric impacts exerted on firms' performance gains by the coexistence of inno- vation competence and well-managed quality practices. Several contributions (López-Mielgo, Montes-Peón, & Vázquez-Ordás, 2009; Ooi, Lin, Teh, & Chong, 2012; Perdomo-Ortiz, González- Benito, & Galende, 2006) have yielded valuable insights into the relationships between innovation competence and quality management practices. In particular, firms' higher innovation capabilities may have a positive effect on quality management practices and in turn contribute to improved firm performance (Escanciano, Fernández, & Vázquez, 2002; López-Mielgo et al., 2009).

However, the relationships between innova- tion, quality management programmes, and the firms' performance were not fully identi- fied in that research. Those relationships warrant further investigation and fuller interpretation. Identification of conditions under which particu- lar relationships enhance or constrain innovation competencies and performance is an important research area. To address the above gaps in knowl- edge, this study integrated the resources-based view of the firm (RBV) (Barney, 1991, 2001) and institutional theory (DiMaggio & Powell, 1983) into a theoretical framework for exploring how innovation competence, quality management, and the interaction of these factors determine firm per- formance. This study had two primary objectives. The first was to examine the potentially non-linear relationship between innovation competences and quality management practices implementation in high-tech sectors. The second objective was to elu- cidate how quality management practices might strengthen or weaken the relationship between innovation competence and firm performance.

The paper is organised as follows: The next section offers an overview of the relevant litera- ture and development of hypotheses; third sec- tion presents the Methodology; fourth section analyses the Results; and fifth section presents the Discussion and conclusions.

Literature review and hypotheses

Innovation is a firm's most valuable asset for achieving competitive advantage (Cho & Pucik, 2005) . Theoretically, this perspective rests on the resource-based views of the firm (Barney, 1991, 2001). Innovation is one of the most important activities of firms, as it not only provides access to markets but also enables firms to maintain performance gains. Consistent with this perspec- tive, research in innovation studies has identified positive performance effects when firms engage in innovative endeavours, including firms' prod- uct innovation (Bigliardi, 2013; Kleinschmidt & Cooper, 1991), process innovation (Bigliardi, 2013; Wan, Ong, & Lee, 2005), technologi- cal innovation (Schumpeter, 1942; Utterback & Suarez, 1993; Wang, Lu, & Chen, 2008), research and development (R&D) (Prajogo & Sohal, 2006; Zeng, Peng, & Tam, 2013), and well-managed quality practices (Naveh & Erez, 2005; Perdomo- Ortiz et al. …

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