Academic journal article Journal of Management Research

Relationship between Innovation, Quality Practices and Firm Performance: A Study of Service Sector Firms in Pakistan

Academic journal article Journal of Management Research

Relationship between Innovation, Quality Practices and Firm Performance: A Study of Service Sector Firms in Pakistan

Article excerpt


This study explains the relationship between innovations, quality practices and firm performance of service sector firms in Pakistan. The study discusses various types of innovation practices in the service sector based on the Oslo manual and then different types of quality practices based on the EFQM model for quality excellence. In this study a detailed questionnaire was developed to measure the relationship between innovations, quality practices and firm's performance and data was collected from 157 service sector firms offering different types of services. The data was analyzed using different descriptive and inferential statistical techniques and reliability test, factor analysis, correlation analysis and regression analysis. The results show that innovations like organizational innovations have a positive relationship among management leadership, policy and strategy for quality then other innovation types while innovation results, employee results have a more positive relationship with process innovations and employee management techniques. Finally the study discusses the limitations and scope for future research in the area.

Keywords: Innovation, Total Quality Management, Service sector, Performance

1. Introduction

Words like innovation and creativity are used extensively these days in every forum whether we talk about the service sector or studies from the manufacturing industry and a very tightly linked concept with innovation and creativity is quality, in short if the innovation or creativity does not bring improvement in the quality of a firms service such innovation and creativity is useless. This study is an effort to look into the relationship between innovation and quality improvement practices, and to see how different types of innovation strategies and quality practices strengthen each other or vice versa. As we know many firms from different countries now a day's faces high levels of competition and find themselves in a direct competition with both local and international competitors and the reason for this intense competition lies in fast technological changes and globalization of trade Hippel (2012). In this scenario in order to survive firms must show higher level of efficiency at low cost to produce customer oriented novel products/services that are innovative as well as cost effective. There are many different management philosophies which can help firms achieve this goal and total quality management is among one of these philosophies.

2. Theoretical Background

Studies in the area of innovation from private as well as public sectors has greatly improved our understanding about the processes underlying innovation and how they affects the companies' performance, but many researchers like Windrum (2008) suggests that public sector innovations are implemented by regulated frameworks and many public sector innovations for example the introduction of internet has helped in other breakthroughs but still these service innovations in public sector are considered not very significant as compared to private sector innovations in the manufacturing sector, one reason for such arguments is that many researchers have concentrated their efforts to explain the private sector innovations and their affects on businesses and economies. Other researchers like Gallouj and Djellal (2010) explains how the private sector innovation methodologies can still apply in the public sector, in their study they explained how the different approaches i.e. demarcation, assimilation and integration are useful in explaining public sector innovations as well, Miles (2007) explains how services are not very different from products and it may not always be easy to isolate or distinguish them from each other as many services cannot be provided with the help of other associated products so many product innovation methodologies are linked to service innovations as well. While according to Chen (2009) public services are only considered effective when they are efficient. …

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