Synergy effects of innovation on firm performance

Abstract

The synergy effects of product, process, marketing, and organizational innovation are examined with consideration of the innovativeness levels and industrial categories. This study also investigates the effect of a firm's strategic orientations, exploration and exploitation, on innovation activities. Results indicate that exploration and exploitation orientations have positive impacts on product innovation and process innovation respectively. Process innovation encourages both radical and incremental product innovation. In case of the moderating effect of marketing and organizational innovation, there are some differences between high-tech and low-tech industry. For high-tech firms, the relationship between a new product and firm performance is increased with the introduction of marketing innovation. In the case of low-tech firms, process innovation has direct and positive impacts on a firm's performance with organizational innovation. The findings show that the synergy effects of innovation exist and can be changed depending on the innovativeness levels and industrial categories.