Do Managerial Practices Matter in Innovation and Firm Performance Relations? New Evidence from the UK

Ilayda Nemlioglu and Sushanta Mallick ()

European Financial Management, 2017, vol. 23, issue 5, 1016-1061

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.

Date: 2017
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