Endogeneity and dynamics of innovation and firm performance
by Anup M. Nandialath; Ramesh Mohan; Madan Annavarjula
International Journal of Productivity and Quality Management (IJPQM), Vol. 13, No. 3, 2014

Abstract: Technological and innovation capabilities play an important role in determining the performance of firms, especially in knowledge intensive industries. Despite the plethora of studies testing the relationship between innovation capabilities and firm performance, little consensus has been achieved on the veracity of the theoretical claims. In this paper, we argue that the lack of consensus could be on account of the failure to take into account the endogeneity that arises from the decision process that underlies the relationship between development of technological capabilities and its impact on firm performance. We address both these issues and demonstrate that alternative empirical designs can help provide greater external validity.

Online publication date: Sat, 17-May-2014

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