The Relationship between Innovation and Firm Performance: An Empirical Evidence from Turkish Automotive Supplier Industry

Abstract

Innovation is widely regarded as one of the most important sources of sustainable competitive advantage in an increasingly changing environment, because it leads to product and process improvements, makes continuous advances that helps firms to survive, allows firms to grow more quickly, be more efficient, and ultimately be more profitable than non-innovators. The main purpose of this study is to examine the relationships between innovation and firm performance. The survey of this study is conducted on top level managers of 113 firms operating in the automotive supplier industry which is one of the most innovative industries in Turkey, as of the year 2011. The obtained data from the questionnaires are analyzed through the SPSS statistical package program. Analysis results demonstrated that technological innovation (product and process innovation) has significant and positive impact on firm performance, but no evidence was found for a significant and positive relationship between non- technological innovation (organizational and marketing innovation) and firm performance.