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06

Is Continuous Innovation Inevitable to Promote Performance Growth? -- An Analysis Based on the Moderating Effect of Environmental turbulence


Abstract:By studying a total of 5450 data sample points of 545 listed companies in Shanghai and Shenzhen from 2007 to 2016, the complex relationship between the continuity of technological innovation and the performance of enterprises in the external environment is discussed based on the current environmental turmoil situation. The results show that there is an inverted U-shaped relationship between the persistence of technological innovation and enterprise performance, and the fluctuation of technological environment has no significant regulatory effect on the relationship between the two, while the volatility of market environment will intensify the inverted U-shaped relationship between the two: that is, with the strengthening of market volatility, the marginal benefit of technological innovation persistence on enterprise performance improvement is more obvious, and the highest point is higher. At the same time, however, the rate of decline in marginal benefits from excessive innovation sustainability will be accelerated. Therefore, enterprises should pay attention to the degree of turbulence in the environment, in the case of stable market changes can be appropriate to enhance the intensity of continuous innovation, in the stage of excessive market volatility to avoid blindly promoting enterprise continuous innovation, or appropriate to reduce the intensity of continuous innovation, to avoid "half the effort".

 

Key words:Environmental turbulence, Continuous innovation behavior, Enterprise performance

 

Abstract:  The world is at the edge of a historical tech-revolution and China is standing at the center of storm that has the ability and possibility to completely reform current technology market. That's to say, Chinese enterprises are right in such huge a tide of global change: the technology environment, market environment turmoil or great changes (sometime, even structural reform) will become the common state of enterprise development. This change of commercial environment will bring a hard issue that the relationship between continuous innovation and enterprise performance may become more complex hence is hard to be taken advantage of by companies. Given such an environmental volatility scenario, how can enterprises fulfill corporate performance improvement through continuous innovation? This path is full of challenges and, meanwhile, opportunities. From the perspective of environmental dynamics, this paper tries to explain the complex relationship between continuous innovation and enterprise performance in the current situation, discuss the moderate effect of environmental dynamics on the relationship, and reveal the path of innovation sustainability to improve enterprise performance under different environmental turbulence. Based on the U model of continuous innovation and enterprise performance. Specifically, 5450 data sample points from 545 listed companies, within Shanghai and Shenzhen stock markets, from 2007 to 2016 are selected to conduct empirical evidence,. the complex relationship between technological innovation sustainability and enterprise performance in the external environment is discussed when combined with the current situation of environmental dynamics. The empirical analysis supports the following conclusions :(1) the impact of continuous technological innovation behavior on enterprise performance is nonlinear, there is an inverted U type of relationship. Empirical analysis results show that technological innovation sustainability has an inverted U relationship with enterprise performance. When technological innovation sustainability is low, technological innovation sustainability has a positive effect on enterprise performance. (2) The results of empirical

analysis show that technological environmental dynamics has no significant effect on the relationship between technological innovation sustainability and enterprise performance, while market dynamics plays an important role in the U relationship between technological innovation sustainability and enterprise performance. That is, with more significant fluctuation of market environment, the rising period of technological innovation persistence on enterprise performance will rise faster, and the decline of marginal reward caused by excessive and

continuous innovation behavior which does not match the size of the enterprise itself will be more obvious. There are still many shortcomings of this article, at least including : the technological innovation activities of enterprises are not further divided, the relationship between technological innovation persistence of different models (such as breakthrough innovation and progressive innovation) and different types of technological innovation persistence (such as management innovation, organizational innovation, etc.) and enterprise performance needs further study; third, the research on the environment from the industry level, did not examine the impact of "indirect environment" on the relationship between technological innovation sustainability and enterprise performance. Based on this, the future research topics can be classified to examine the impact of different types of technological innovation on enterprise performance; in addition, the research subjects can be expanded to carry out more in-depth related research on enterprises of different industries and different sizes.

 

Key words: environmental dynamics, innovation persistence, corporate performance

 

Author: Xu Zhi, Chen Zheng Yifan, Zhu Mingjing

Author: School of Business Administration, South China University of Technology

The full text has been published in Science and Science and Technology Management, No. 12, 2020.

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