Organizational innovation and its effects

Organizational innovation, its persistence, its relationship with technological innovation, and their influence on firm performance remain under-researched. These issues are investigated using an integrated firm-level data set obtained from two recent waves of the Norwegian Community Innovation Survey (CIS 3 and 4) and firms’ financial accounts.

A Heckman two-step estimation, to ensure against potential sample selection bias, was used to demonstrate that between 1999 and 2004 a number of Norwegian firms were persistent in organizational innovation, and this persistence raised the (positive) effects of organizational innovation on their performance. The results also reveal that many firms undertook, and benefited from, different types of organizational innovation, and such benefits were increased by the combinative effect of organizational and technological innovation. The study also found that older and larger firms are more inclined to attempt organizational change, while smaller firms are more able to benefit.

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