Does Innovation Mediate Firm Performance?: A Meta-Analysis of Determinants and Consequences of Organizational Innovation

Abstract

This study uses emerging meta-analytic methods, in combination with structural equations methodology, to synthesize empirical studies that examine the correlates (antecedents and/or outcomes) of organizational innovation. Overall, this study draws upon a meta-analytic database of 134 independent samples from 83 studies from the period of 1980 through 2003. Specifically, the study examines the impact of 27 determinants and 3 performance outcomes of innovation with an overall sample size of 122,943. Organizational capabilities and structure account for the majority of unique variance explained in predicting innovation. Overall findings indicate that innovation is significantly and positively related to superior performance. Additionally, a multivariate generalized least squares (GLS) moderator analysis indicates that measurement factors and research design considerations in model specification significantly biases the observed effects within a given study. Using a dichotomous measure of innovation deflates observed effect sizes, while studying innovation cross-sectionally and within one industry sector inflates the observed effect. The findings also help address a number of conflicting results. Finally, this study tests an integrative model of product innovation and finds support for innovation as a partial mediator between environmental and organizational variables and financial performance. The study identifies surpluses and shortages in the empirical literature on organizational innovation.