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.

Performance management of SMEs: a systematic literature review for antecedents and moderators

“…Innovativeness is a strategic means by which SMEs deal with changes in the internal and external environments in order to respond to the turbulent environment (Rhee et al , 2010). Recently, the findings of Kafetzopoulos et al (2020) support the view that innovation capabilities like product, process and marketing directly contribute to firms' performance.…”

“…Approaches and definitions of firm measurement vary as it is multidimensional, taking into account all stakeholders within the organization and the balance and potential trade-off between short-term and long-term objectives (Simpson et al , 2012). As a complex construct, performance has been measured in a variety of ways (Kafetzopoulos et al , 2020). According to Neely et al (2000), there are two basic types of performance measure in any organization, those that are related to results (financial performance) and those that focus on the determinants of the results (quality, flexibility, resource utilization and innovation).…”

“…If, for example, the market is stable and can be perfectly predicted, there will be little immediate risk to firms. Otherwise, the change of environmental conditions poses uncertainty and thus risk to firms (Kafetzopoulos et al , 2020). Though the moderating role of environment has been at the core of the SMEs' literature (Hernández-Linares et al , 2020), several studies related to SMEs' performance include references to internal or external boundary conditions.…”

The effect of uncertainty on the formulation of strategies: a study of selected Indian organizations

“…Uncertainty has been described variously as decision-making (Kafetzopoulos et al 2019;Lawrence and Lorsch 1967;Thomson 1967), decision on alternatives (Afsordegan et al 2016;Child 1972), complexity (Galbraith 1973;Pourali 2019), randomness (Abdo and Flaus 2016;Cyert and March 1963), and disorder (Emery and Trist 1965;Stinchfield and Silverberg 2016). Some scholars have conceived uncertainty as the objective dimension of the external environment, while others have viewed uncertainty as the interpretation of the perceptual process that helps decision-makers in conceptualizing the environment (Milliken 1987a, b).…”

Environmental Uncertainty and Firm Performance: The Moderating Role of Corporate Governance

“…Several studies linked environmental uncertainty as a situational factor that can moderate the company's internal factors on performance. (Kafetzopoulos et al, 2019) examined environmental uncertainty as moderation on the relationship between innovation dimensions and firm performance. (Merschmann and Thonemann, 2011) examined environmental uncertainty as moderation on the relationship between supply chain flexibility and firm performance.…”