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The impact of innovation capability on the performance of manufacturing companies: The Greek case

Dimitrios Kafetzopoulos (Department of Business Administration of Food and Agricultural Enterprises, University of Patras, Agrinio, Greece)
Evangelos Psomas (Department of Business Administration of Food and Agricultural Enterprises, University of Patras, Agrinio, Greece)

Journal of Manufacturing Technology Management

ISSN: 1741-038X

Article publication date: 2 February 2015

Abstract

Purpose

The purpose of this paper is to provide additional evidence of the impact of innovation on three dimensions of a firm’s performance, namely product quality, operational performance and financial performance.

Design/methodology/approach

The analysis includes an initial exploratory factor analysis, followed by confirmatory factor analysis and structural equation modelling, in order to investigate the relations between the constructs of the proposed model. A sample of 233 Greek manufacturing firms is used for this purpose.

Findings

According to the study findings, “innovation capability” directly contributes to product quality and operational performance. Although it has no direct impact on manufacturing firms’ financial performance, it has an indirect impact through the moderator of operational performance. Thus, innovation is an opportunity for a manufacturing firm to improve its performance.

Research limitations/implications

The sample of the responding manufacturing companies is limited to small and medium-sized enterprises from one country (Greece). In addition, manufacturing firms from different sectors have different resources, capabilities and performance.

Practical implications

The study offers clear implications for managers who should put additional emphasis on innovation as it is an important element for achieving improved overall firm performance and sustainable competitive power.

Originality/value

Based on the multi-dimensional structure of innovation, this empirical study determines the contribution of “innovation capability” to specific performance dimensions of manufacturing companies.

Keywords

Citation

Kafetzopoulos, D. and Psomas, E. (2015), "The impact of innovation capability on the performance of manufacturing companies: The Greek case", Journal of Manufacturing Technology Management, Vol. 26 No. 1, pp. 104-130. https://doi.org/10.1108/JMTM-12-2012-0117

Publisher

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Emerald Group Publishing Limited

Copyright © 2015, Emerald Group Publishing Limited