Technical and Operational Innovations approaches to firm performance of SMEs auto services sector
Keywords:technical innovation, operational innovation, firm performance, SMEs
The purpose of this paper is to provide a framework to help SMEs auto service providers appreciate the critical contribution of innovations (technical and operational) to their performance. Specifically, the study examines the direct relationship between technical innovation and firm performance and the mediating role of operational innovation in the relationship. Participants of the study were drawn from the SMEs auto service provider in Kumasi, Ghana. Multiple regression analysis was performed to estimate the direct relationship and the mediating effects. In all, 180 questionnaires were used for the analysis after performing data screening. The results demonstrate that there is a statistically significant relationship between technical innovation and firm performance. Operational innovation was also found to mediate the relationship between technical innovation and firm performance. The study assumed that information regarding the operations of the participants is complete and that participants were selected based on willingness to participate. It is recommended for future researchers to explore other avenues of the subject matter to develop a standardised pattern of operations in the SMEs auto service sector.
Amara, N. and Landry, R. (2005). Sources of information as determinants of novelty of innovation in manufacturing firms: evidence from the 1999 statistics Canada innovation survey. Technovation, 25(3), pp.245-259.
Atuahene-Gima, K., 2005. Resolving the capability—rigidity paradox in new product innovation. Journal of marketing, 69(4), pp.61-83.
Baer, M., & Frese, M.(2003). Innovation is not enough: Climates for initiative and psychological safety, process innovations, and firm performance. Journal of Organizational Behavior: The International Journal of Industrial, Occupational and Organizational Psychology and Behavior, 24(1), 45-68.
Barker III, V.L. and Mueller, G.C. (2002). CEO characteristics and firm R&D spending. Management Science, 48(6), pp.782-801.
Bartel, C.A. and Garud, R. (2009). The role of narratives in sustaining organizational innovation. Organization science, 20(1), pp.107-117.
Bell, G.G. (2005). Clusters, networks, and firm innovativeness. Strategic management journal, 26(3), pp.287-295.
Brouwer, M. (2000). Entrepreneurship and uncertainty: innovation and competition among the many. Small Business Economics, 15(2), pp.149-160.
Camisón, C. and Villar-López, A. (2014). Organizational innovation as an enabler of technological innovation capabilities and firm performance. Journal of business research, 67(1), pp.2891-2902.
Cho, H.J. and Pucik, V. (2005). Relationship between innovativeness, quality, growth, profitability, and market value. Strategic management journal, 26(6), pp.555-575.
Damanpour, F. (1996). Organizational complexity and innovation: developing and testing multiple contingency models. Management Science, 42(5), pp.693-716.
Damanpour, F., Walker, R.M. and Avellaneda, C.N. (2009). Combinative effects of innovation types and organizational performance: A longitudinal study of service organizations. Journal of management studies, 46(4), pp.650-675.
Dawes, J. (1999). The relationship between subjective and objective company performance measures in market orientation research: further empirical evidence. Marketing bulletin-department of marketing massey university, 10, 65-75.
Dess, G. G., & Robinson Jr, R. B. (1984). Measuring organizational performance in the absence of objective measures: the case of the privately‐held firm and conglomerate business unit. Strategic management journal, 5(3), 265-273.
Donkor, J., Donkor, G. N. A., & Kankam-Kwarteng, C. (2018). Strategic planning and performance of SMEs in Ghana: The moderating effect of market dynamism. Asia Pacific Journal of Innovation and Entrepreneurship, 12(1), 62-76.
Fiol, C.M. (1996). Squeezing harder doesn't always work: Continuing the search for consistency in innovation research. Academy of Management Review, 21(4), pp.1012-1021.
Gronum, S., Verreynne, M. L., & Kastelle, T. (2012). The role of networks in small and medium‐sized enterprise innovation and firm performance. Journal of Small Business Management, 50(2), 257-282.
Gunday, G., Ulusoy, G., Kilic, K. and Alpkan, L. (2011). Effects of innovation types on firm performance. International Journal of production economics, 133(2), pp.662-676.
Harrison, J.S., Bosse, D.A. and Phillips, R.A. (2010). Managing for stakeholders, stakeholder utility functions, and competitive advantage. Strategic management journal, 31(1), pp.58-74.
Huiban, J.P. and Bouhsina, Z. (1998). Innovation and the quality of labour factor: an empirical investigation in the French food industry. Small Business Economics, 10(4), pp.389-400.
Jiménez-Jiménez, D. and Sanz-Valle, R. (2011). Innovation, organizational learning, and performance. Journal of business research, 64(4), pp.408-417.
Johannessen, J.A. (2008). Organisational innovation as part of knowledge management. International Journal of Information Management, 28(5), pp.403-412.
Kankam-Kwarteng, C. and Amoateng, F. (2016). Servicescape And Customers’ Willingness-To-Pay For Vehicle Repairs And Maintenance Services. European Scientific Journal, ESJ, 12(10).
KanKam-Kwarteng, C., Gatsi, J. G., Donkor, J., & Acheampong, S. (2018). Service Innovation and Firm Performance of SMEs auto service: the mediating role of Pricing Capability. Archives of Business Research, 6(8), 39-50.
Klingenberg, B., Timberlake, R., Geurts, T.G. and Brown, R.J. (2013). The relationship of operational innovation and financial performance—A critical perspective. International Journal of Production Economics, 142(2), pp.317-323.
Koberg, C.S., Detienne, D.R. and Heppard, K.A. (2003). An empirical test of environmental, organizational, and process factors affecting incremental and radical innovation. The Journal of High Technology Management Research, 14(1), pp.21-45.
Kotabe, M., Srinivasan, S. S., & Aulakh, P. S. (2002). Multinationality and firm performance: The moderating role of R&D and marketing capabilities. Journal of international business studies, 33(1), 79-97.
Li, H. and Atuahene-Gima, K. (2001). Product innovation strategy and the performance of new technology ventures in China. Academy of management Journal, 44(6), pp.1123-1134.
McGrath, R.G. (2001). Exploratory learning, innovative capacity, and managerial oversight. Academy of management journal, 44(1), pp.118-131.
Molloy, J.C., Chadwick, C., Ployhart, R.E. and Golden, S.J. (2011). Making intangibles “tangible” in tests of resource-based theory: A multidisciplinary construct validation approach. Journal of Management, 37(5), pp.1496-1518.
Mumford, M.D. and Licuanan, B. (2004). Leading for innovation: Conclusions, issues, and directions. The leadership quarterly, 15(1), pp.163-171.
Oke, A. and Kach, A. (2012). Linking sourcing and collaborative strategies to financial performance: The role of operational innovation. Journal of Purchasing and Supply Management, 18(1), pp.46-59.
Popadiuk, S. and Choo, C.W. (2006). Innovation and knowledge creation: How are these concepts related?. International journal of information management, 26(4), pp.302-312.
Peteraf, M.A. and Barney, J.B. (2003). Unraveling the resource‐based tangle. Managerial and decision economics, 24(4), pp.309-323.
Poon, J.M., Ainuddin, R.A. and Junit, S.O.H. (2006). Effects of self-concept traits and entrepreneurial orientation on firm performance. International small business journal, 24(1), pp.61-82.
Prajogo, D. I., & Ahmed, P. K. (2006). Relationships between innovation stimulus, innovation capacity, and innovation performance. R&D Management, 36(5), 499-515.
Ray, G., Muhanna, W.A. and Barney, J.B. (2005). Information technology and the performance of the customer service process: A resource-based analysis. MIS quarterly, pp.625-652.
Rosenbusch, N., Brinckmann, J. and Bausch, A. (2011). Is innovation always beneficial? A meta-analysis of the relationship between innovation and performance in SMEs. Journal of business Venturing, 26(4), pp.441-457.
Rice, A.K. (2013). Productivity and social organization: The Ahmedabad experiment: Technical innovation, work organization and management. Routledge.
Rubera, G. and Kirca, A.H. (2012). Firm innovativeness and its performance outcomes: A meta-analytic review and theoretical integration. Journal of Marketing, 76(3), pp.130-147.
Sanz-Valle, R., Naranjo-Valencia, J.C., Jiménez-Jiménez, D. and Perez-Caballero, L., 2011. Linking organizational learning with technical innovation and organizational culture. Journal of Knowledge Management, 15(6), pp.997-1015.
Sarooghi, H., Libaers, D. and Burkemper, A., 2015. Examining the relationship between creativity and innovation: A meta-analysis of organizational, cultural, and environmental factors. Journal of business venturing, 30(5), pp.714-731.
Singh, R.K., Garg, S.K. and Deshmukh, S.G. (2008). Strategy development by SMEs for competitiveness: a review. Benchmarking: An International Journal, 15(5), pp.525-547.
Sohn, S. Y., Kim, H. S., & Moon, T. H. (2007). Predicting the financial performance index of technology fund for SME using structural equation model. Expert Systems with Applications, 32(3), 890-898.
Standing, C. and Kiniti, S. (2011). How can organizations use wikis for innovation?. Technovation, 31(7), pp.287-295.
Staropoli, C. (1998). Cooperation in R&D in the pharmaceutical industry—the network as an organizational innovation governing technological innovation. Technovation, 18(1), pp.13-23.
Subramaniam, M. and Youndt, M.A. (2005). The influence of intellectual capital on the types of innovative capabilities. Academy of Management Journal, 48(3), pp.450-463.
Tether, B.S. (2005). Do services innovate (differently)? Insights from the European innobarometer survey. Industry & Innovation, 12(2), pp.153-184.
Therrien, P., Doloreux, D. and Chamberlin, T. (2011). Innovation novelty and (commercial) performance in the service sector: A Canadian firm-level analysis. Technovation, 31(12), pp.655-665.
Koc, T. and Ceylan, C. (2007). Factors impacting the innovative capacity in large-scale companies. Technovation, 27(3), pp.105-114.
Venkatraman, N. and Ramanujam, V. (1986). Measurement of business performance in strategy research: A comparison of approaches. Academy of management review, 11(4), pp.801-814.
Wall, T. D., Michie, J., Patterson, M., Wood, S. J., Sheehan, M., Clegg, C. W., & West, M. (2004). On the validity of subjective measures of company performance. Personnel Psychology, 57(1), 95-118.
Walker, R. M., (2004). Innovation and Organisational Performance: Evidence and a Research Agenda (June 2, 2004). Advanced Institute of Management Research Paper No. 002. Available at SSRN: http://dx.doi.org/10.2139/ssrn.1306909
Wang, L., Yeung, J. H. Y., & Zhang, M. (2011). The impact of trust and contract on innovation performance: The moderating role of environmental uncertainty. International Journal of Production Economics, 134(1), 114-122.
Wolfe, R.A. (1994). Organizational innovation: Review, critique and suggested research directions. Journal of management studies, 31(3), pp.405-431.
Zhou, K.Z., Yim, C.K. and Tse, D.K. (2005). The effects of strategic orientations on technology-and market-based breakthrough innovations. Journal of marketing, 69(2), pp.42-60.