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Relationship between innovativeness, quality, growth, profitability, and market value

Relationship between innovativeness, quality, growth, profitability, and market value The purpose of this study is to examine the relationship between innovativeness, quality, growth, profitability, and market value at the firm level. Building on concepts from a resource‐based view of a firm and organizational learning, innovation and quality literature, we propose the innovativeness–quality–performance model, which describes how a firm's capability to balance innovativeness with quality drives growth and profitability, and in turn drives superior market value. Results of structural equation models indicate that (1) innovativeness mediates the relationship between quality and growth, (2) quality mediates the relationship between innovativeness and profitability, (3) both innovativeness and quality have mediation effects on market value, and (4) both growth and profitability have mediation effects on market value. Implications for theories and practices are discussed. Copyright © 2005 John Wiley & Sons, Ltd. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Strategic Management Journal Wiley

Relationship between innovativeness, quality, growth, profitability, and market value

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References (105)

Publisher
Wiley
Copyright
Copyright © 2005 John Wiley & Sons, Ltd.
ISSN
0143-2095
eISSN
1097-0266
DOI
10.1002/smj.461
Publisher site
See Article on Publisher Site

Abstract

The purpose of this study is to examine the relationship between innovativeness, quality, growth, profitability, and market value at the firm level. Building on concepts from a resource‐based view of a firm and organizational learning, innovation and quality literature, we propose the innovativeness–quality–performance model, which describes how a firm's capability to balance innovativeness with quality drives growth and profitability, and in turn drives superior market value. Results of structural equation models indicate that (1) innovativeness mediates the relationship between quality and growth, (2) quality mediates the relationship between innovativeness and profitability, (3) both innovativeness and quality have mediation effects on market value, and (4) both growth and profitability have mediation effects on market value. Implications for theories and practices are discussed. Copyright © 2005 John Wiley & Sons, Ltd.

Journal

Strategic Management JournalWiley

Published: Jun 1, 2005

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