The Relationship between Technology, Innovation, and Firm Performance: Empirical Evidence on E-Business in Europe
33 Pages Posted: 12 Jun 2008
Date Written: May 2008
This article analyzes the relationship between the usage of Internet-based technologies, different types of innovation, and performance at the firm level. Data for the empirical investigation originates from a sample of 7,302 European enterprises. The empirical results show that Internet-based technologies were an important enabler of innovation in the year 2003. It was found that all studied types of innovation, including Internet-enabled and non-Internet-enabled product or process innovations, are positively associated with turnover and employment growth. Firms that rely on Internet-enabled innovations are at least as likely to grow as firms that rely on non-Internet-enabled innovations. Finally, it was found that innovative activity is not necessarily associated with higher profitability. Possible reasons for this and implications are discussed.
Keywords: information technology, e-business, innovation, firm performance, profitability
JEL Classification: M13, O32, M
Suggested Citation: Suggested Citation