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Do Managerial Practices Matter in Innovation and Firm Performance Relations? New Evidence from the UK
Author(s) -
Nemlioglu Ilayda,
Mallick Sushanta K.
Publication year - 2017
Publication title -
european financial management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.311
H-Index - 64
eISSN - 1468-036X
pISSN - 1354-7798
DOI - 10.1111/eufm.12123
Subject(s) - leverage (statistics) , business , industrial organization , economics , marketing , computer science , machine learning
Abstract The innovation and firm performance relationship remains a puzzle, as all types of innovation are not equally beneficial. Besides, better‐managed firms can perform better. Integrating these two strands of literature, we examine whether managerial practices explain this relationship using data from UK firms during 1992–2014. We find that firms which focus on R&D activities jointly with better managerial practices benefit favourably. During the post‐crisis period, higher intangibles are only beneficial when combined with R&D activity. Also firms with better managerial practices and innovative activities exhibit a positive effect of higher leverage. Finally, an inverse U‐shaped result supports the Schumpeterian theory of creative destruction.