Dimensions of organisational innovativeness and company financial performance in the biotechnology sector

Abstract

Purpose: The relationship between organisational innovativeness (OI) and company performance has been studied extensively, and the associations found have mostly been positive. However, as OI is a multidimensional concept, more nuanced research is needed to identify which dimensions of innovativeness companies should focus on. The purpose of this paper is to longitudinally investigate the links between dimensions of OI and company financial performance, based on a sample of Finnish and Estonian pharmaceutical biotechnology companies. Design/methodology/approach: Interviews inquiring about OI were conducted in 26 biotechnology companies and then their performance was measured over three subsequent years using objective financial data. Due to limited sample size, qualitative comparative analysis is employed in addition to non-parametric statistical tests. Findings: Overall, OI did not decisively influence financial performance in the studied sector. There were, however, dimensions related to human resource policies that appeared to have more potential to positively impact financial performance, whereas the strategic dimension was actually aversive to certain performance indicators. Research limitations/implications: The study limitations are a small sample, possible managerial bias in the assessment of OI, and focus on financial measures only. Practical implications: The study demonstrates that OI is a multidimensional construct and not all dimensions play an equal role in financial performance. Innovation-supportive human resource policies and strategic flexibility contributes to financial performance in the pharmaceutical biotechnology sector. Originality/value: The contribution of the study is the analysis of a specific sector with a longitudinal approach by bridging quantitative and qualitative approach.