Innovation and performance in SME furniture industries

Abstract

Purpose Innovation has been traditionally considered as a generator of competitiveness, which leads to superior performance. Considering that innovation is a complex phenomenon, it is interesting to understand how innovations are linked with organisations' performance. In this sense, the purpose of this paper is to understand the conditions that make innovation profitable. Design/methodology/approach The methodology used in the analysis is a multi‐case comparative research of low‐tech, small and medium‐sized furniture firms from Italy, Spain and Finland. Findings The study shows some evidence that innovation positively influences business performance. In particular, the results suggest that different performance levels are linked to the type of innovation developed. Practical implications The study presents direct implications for companies aiming at improving their innovation effectiveness. First, it is recommended that firms consider the environment in which they operate; second, they should coordinate future innovation plans by considering the synergistic process among the product, market and process innovations to arrive at a combination that will yield optimal levels of performance. Additionally, the study points out the crucial role that the management style plays in developing innovation capabilities. Originality/value The paper offers an insight to explain why some companies are more successful at starting and developing innovation than others. The finding that a successful innovation profile is related to the performance of the company represents an interesting contribution to the management of firms.