Innovation and Financial Performance in Manufacturing Companies: an Empirical Study Tunisian
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Innovation and Financial Performance in Manufacturing Companies: an Empirical Study Tunisian Jamel Chouaibi 1 Received: 29 June 2019 / Accepted: 13 September 2020/ # Springer Science+Business Media, LLC, part of Springer Nature 2020
Abstract This study focuses on the innovation activities as determinants of the financial value of the firm. This approach breaks with the binary approach to measure the degree of innovation and replaces it by an aggregative index. The innovation level corresponding to a set of innovation activities is reported on the basis of a “scoring” for the processed industrial enterprises. On the basis of this proposal, we develop a quantitative measure of the level of innovation in order to evaluate the impact of innovation on the financial performance, controlling for some other variables. On a sample of 95 Tunisian industrial companies, empirical results showed that financial performance depends on the realization of innovation activities and the disclosure of these innovation activities. The empirical research field is Tunisia. In fact, it is an example of a developing country that has been involved in an important national program since 1995 of upgrading companies to help them cope with international competition. This national program is also meant to restructure Tunisian companies by encouraging them to invest in intangible investment so as to stimulate innovation which leads to a sustainable competitive advantage. Keywords Innovation index . Financial performance . Investment . Disclosure JEL Classification G31 . O31 . O32
Introduction According to the organization for economic co-operation and development (1997), “the implementation of a new or significantly improved product (good or service), or
* Jamel Chouaibi [email protected]
1
Department of Accounting, University of Sfax-Tunisia, Airport Road km 4, 3018 Sfax, Tunisia
Journal of the Knowledge Economy
process, a new marketing method, or a new organizational method in business practices, workplace organization or external relations.” Moreover, recent literature on innovation considers it appropriate to go be beyond the categories between the innovations of a managerial nature and those of a technical nature while favoring a comprehensive approach (Van and Poole 1995; Amir and Lev 1996; Lin et al. 2009). Therefore, the innovation level can be defined as a synthetic set of innovation activities carried out by businesses. This enables to distinguish the most innovative companies from the less innovative ones (Xing et al. 2020). However, the implementation of an innovation strategy is a very difficult exercise. Consequently, controlling investment projects in innovation is complex since it generally consists in investing in specific assets that raise assessment problems. The information at the disposal of companies and capital providers (in particular creditors) on innovative investment projects is not the same. In this regard, fund providers are subject to information asymmetry and managerial opportunism problems. Similarly,
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