The relationship of technological and organizational innovation with firm performance: opening the black box of dynamic complementarities
Date
2022
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Abstract
This paper explores the dynamic nature of complementarities between technological and
organizational innovation at firms. Using Spanish firm level panel data (PITEC) over period
2008-2016, it investigates how the formation, keeping and ending of the joint adoption of these
two core types of innovation is associated with firm performance. In the case of the general
static test of complementarities we find no evidence of complementarities. However, once we
focus on the analysis of within-firm changes in the complementarity bundle of innovation types,
we observe clear evidence that some sequential as well as simultaneous strategy switches
towards combining technological and organizational novelties are associated with significant
performance premia at firms. Our findings point out the key role of technological innovation in
these complementarities. We find evidence of sequential complementarity only when
organizational innovation is added to the already existing technological innovation at the firm, not when organizational innovation is added as first component before technological innovation. In the case of dissolving the complementarity bundle of innovation types, the key disadvantage for the firm is related to dropping the technological innovation. Giving up only organizational innovation while keeping the technological innovation appears to have no negative effect, on average, on firm performance.
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Keywords
technological innovation, organizational innovation, complementarities, sequential complementarity