Technological Innovation, Firm Performance, and Institutional Context: A Meta-Analysis

Abstract

Technological innovation, a complex and multidimensional construct, refers to innovations associated with an organization's operations, such as the introduction of new/improved products or processes. Scholars and practitioners recognize the importance of technological innovation in a firm's ability to obtain a sustainable competitive advantage. However, the empirical findings on the overarching relationship between technological innovation and firm performance remain inconclusive. Thus, in this article, we attempt to reconcile the mixed empirical results on the relationship by employing a multivariate meta-analytic methodology. We find that technological innovation has a significant and positive impact on a firm's performance. Furthermore, we find empirical support for the moderating influence of cross-cultural and institutional differences on the relationship. We observed a better performance outcome for innovation occurring in nations with a lower propensity to avoid uncertainty and collectivistic attitudes. In contrast, performance suffers when technological innovation occurs in nations that have stronger patent protection.