What is the relationship between Dynamic Capabilities, Innovation Performance and Profitability

Niels Nolsøe Grünbaum, Marianne Stenger

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    Abstract

    The consequences of dynamic capabilities (i.e. innovation performance and profitability) is an under researched area in the growing body of literature on dynamic capabilities. This study aims to examine the relationship between dynamic capabilities, innovation performance and profitability of small and medium sized enterprises operating in volatile environments. A multi-case study design was adopted as research strategy. The findings reveal a positive relationship between dynamic capabilities and innovation performance in the case enterprises, as we would expect. It was, however, not possible to establish a positive relationship between innovation performance and profitability. Nor was there any positive relationship between dynamic capabilities and profitability.
    The main contribution of this study is a better understanding of the realm of small and medium sized enterprises’ internal and external business atmosphere. A sphere dominated, on the positive side, by high product quality, high product innovation, high flexibility, a very low return rate of failed products, a flat organization structure and an involving style of leadership. On the opposite pole it was dominated by a lack of systematism, assessment, monitoring, marketing speculations and feasibility calculation. Furthermore, the sphere was dictated by asymmetric supplier-customer relationships and negotiation power leading, among other possible factors, to meager profitability.
    Original languageEnglish
    Title of host publication6th Annual International Conference on Business and Society in a Global Economy
    EditorsGregory T. Papanikos
    Number of pages1
    Place of PublicationAthen, Greece
    PublisherAthens Institute for Education and Research
    Publication dateDec 2012
    ISBN (Print)978-960-9549-32-5
    Publication statusPublished - Dec 2012
    Event6th Annual International Conference on Business and Society in a Global Economy - Athen, Greece
    Duration: 17 Dec 201220 Dec 2012

    Conference

    Conference6th Annual International Conference on Business and Society in a Global Economy
    CountryGreece
    CityAthen
    Period17/12/201220/12/2012

    Cite this

    Grünbaum, N. N., & Stenger, M. (2012). What is the relationship between Dynamic Capabilities, Innovation Performance and Profitability. In G. T. Papanikos (Ed.), 6th Annual International Conference on Business and Society in a Global Economy Athens Institute for Education and Research. http://www.atiner.gr/cbc.htm