Innovation and business performance - a provisional multi-regional analysis

provided by Research Papers in Economics

Innovation and Business Performance:

A Provisional

Multi-Regional Analysis

Stephen Roper**, Nola Hewitt-Dundas**, David Smallbone*, David North*, & Ian

Vickers*

** Northern Ireland Economic Research Centre,
22-24 Mount Charles, Belfast, BT 7 1NZ
(Tel: ++44 (0) 2890-261-811; Fax: ++44 (0) 2890-439435; Email:
S.Roper@qub.ac.uk)

*Centre for Enterprise and Economic Development Research
Middlesex University Business School

(tel: ++ 44 (0)208 411 5337; Fax: ++ 44 (0)208 411 6607; Email:

D.Smallbone@mdx.ac.uk)

Abstract

Innovation is now widely understood as an evolutionary process, strongly conditioned
by a firm's institutional, locational and market context. An innovation event (e.g. the
introduction of a new product or process) represents the end of a process of
knowledge sourcing, co-ordination and codification by a firm or partnership.

This paper provides a preliminary examination of the causal links in this process of
knowledge sourcing, co-ordination and exploitation and their relationship to enhanced
business performance. The paper represents the first analysis of a large-scale multi-
regional dataset covering three UK regions, Ireland and two German regions.

The empirical focus of the paper is on the knowledge production function and the way
in which the effectiveness of knowledge co-ordination is influenced by firms’
managerial and organisational capabilities. The final link in the causal process relates
to knowledge exploitation i.e. how enterprises’ business performance is influenced by
the co-ordination of knowledge inputs and the innovations which result from the
process of knowledge production Knowledge sourcing through in-house R&D and
through supply chain and non-supply chain collaboration are shown to be
complementary and important in shaping firms' innovation. Innovation is then shown
to be positively linked to turnover and employment growth. No such link is evident to
profitability.

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