A Sequential Model of Innovation Strategy-Company Non-financial Performance Links
This study extends the prior research (Zahra and Das 1993) by examining the association between a company�s innovation strategy and its non-financial performance in the upstream and downstream strategic business units (SBUs) of oil and gas companies. The sequential model suggests a causal sequence a...
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| Format: | Article NonPeerReviewed |
| Published: |
[Yogyakarta] : Universitas Gadjah Mada
2006
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| Online Access: | https://repository.ugm.ac.id/26923/ http://i-lib.ugm.ac.id/jurnal/download.php?dataId=9967 |
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| Institution: | Universitas Gadjah Mada |
| Summary: | This study extends the prior research (Zahra and Das 1993) by examining the association between a company�s innovation strategy and its non-financial performance in the upstream and downstream strategic business units (SBUs) of oil and gas companies. The sequential model suggests a causal sequence among six dimensions of innovation strategy (leadership orientation, process innovation, product/service innovation, external innovation source, internal innovation source, and investment) that may lead to higher company non-financial performance (productivity and operational reliability). The study distributed a questionnaire (by mail, e-mailed web system, and focus group discussion) to three levels of managers (top, middle, and first-line) of 49 oil and gas companies with 140 SBUs in
Indonesia. These qualified samples fell into 47 upstream (supplychain) companies with 132 SBUs, and 2 downstream (demandchain)
companies with 8 SBUs. A total of 1,332 individual usable questionnaires were returned thus qualified for analysis, representing an effective response rate of 50.19 percent. The researcher conducts structural equation modeling (SEM)
and hierarchical multiple regression analysis to assess the goodness- of-fit between the research models and the sample data and to test whether innovation strategy mediates the impact of leadership orientation on company non-financial performance. SEM reveals that the models have met goodness-of-fit criteria, thus the interpretation
of the sequential models fits with the data. The results of SEM and hierarchical multiple regression: (1) support the importance of
innovation strategy as a determinant of company non-financial performance, (2) suggest that the sequential model is appropriate for examining the relationships between six dimensions of innovation strategy and company non-financial performance, and (3) show that the sequential model provides additional insights into the
indirect contribution of the individual dimensions of innovation strategy (partially mediators) to company non-financial performance�productivity or operational reliability. The findings provide empirical evidence extending the previous model of Zahra and Das. These findings also provide a basis for useful recommendations to upstream and downstream SBU managers attempting to implement a sequential model of innovation
strategy �company non-financial performance links. This study shows that upstream SBUs rely on external innovation sources. They will acquire innovation policies through business partnership
development (such as Joint Operation Body for Enhanced Oil Recovery or JOB-EOR, Joint Operation Body for Production Sharing Contract or JOB-PSC) |
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