Strategic innovation towards profitability and growth in the Chinese cosmetic industry - a structural equation modelling approach
by Xu Yang
International Journal of Business Innovation and Research (IJBIR), Vol. 9, No. 5, 2015

Abstract: Strategic innovation research was conducted during the 1980s and early 1990s (Derrick and Soren, 2007). Since then, numerous researchers mentioned strategic innovation from different views. In order to obtain the essential of strategic innovation from these prior papers and improve Chinese cosmetic firms' application of strategic innovation in their business, this paper research the constitution of strategic innovation, and analyse the effect of strategic innovation on profitability and growth in the cosmetic industry by focusing on the Chinese market. In the study, 19 types of strategic innovation were turning up from journal reading. Then, a questionnaire focusing on the cosmetic companies' choice of these 19 types of strategic innovation were sent to 800 cosmetic firms, and 267 firms responded from 25th March 2008 to 25th September 2008. Based on the data, four factors of strategic innovation were extracted by exploratory factor analysis, which were the constitutions of strategic innovation - new market creation, product value addition, competitive disruption, and service value addition. With structural equation modelling (SEM), a research model is establishes between the four constitutions with profitability and growth. The results indicate strategic innovation positively affects profitability and growth in the Chinese cosmetic industry.

Online publication date: Fri, 04-Sep-2015

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