Innovation has become a highly actual topic. The main goal of this study is to identify the existence of any possible impact of innovation on companies’ performances in the case of companies from 115 emergent countries, based on data provided by the World Bank. Thus, using the methodology of principal components analysis, we proposed two composite indexes: a multidimensional composite index measuring the corporate sector's innovation and another composite index measuring the companies’ performances for selected countries. In the case of innovation, four different dimensions were taken into consideration oriented towards the company's endeavor in obtaining the recognition of its products’ quality and accounting practices and also in enhancing its visibility on market and improving communication with business partners using information and communication technologies. Also, corporate performances were described by four measures regarding the dynamics of the annual sales and labor productivity and the company's propensity towards investing in fixed assets or in employee's formal training. The main output of this paper is that, using the generalized linear model in order to identify the relationship between the proposed two composite indexes, the innovation described by the selected dimensions has a significant influence on companies’ performances measures in selected countries.
In the context of current economic environment innovation represents a burden topic for academics, researchers and practitioners as well. Comprehensive research studies on the innovation topic have highlighted its major role both for the survival of companies, and also for increasing their performance and development (García-Morales, Jiménez-Barrionuevo & Gutiérrez-Gutiérrez, 2012; Azubuike, 2013). For the future evolution of a company, regardless how small the extent of corporate innovativeness is, it is preferable instead to lack of innovation. Although there is a wide literature attempting to unravel the relationship between innovation and corporate performance, there is no full consensus of views on the impact of innovation on company’s performance. The research studies on this direction are taking into account different dimensions of innovation process and also different measures for company’s performance and therefore the results are very different. Gopalakrishnan (2000) reveals that some researchers are focusing on innovation magnitude, while other researchers are highlighting the innovation speed. And also some research studies are focusing on corporate performance from a financial point of view, while other studies are taking into account the effectiveness perspective on performance. This is the reason why the research results regarding the relationship innovation – corporate performance are sometimes even divergent, depending on the different perspectives adopted. But still it have been noticed some important views on the relationship between innovation and corporate performance. The classical studies on the relationship between innovation and the corporate performance have generally shown a positive effect of innovation on different measures of company’s performance (Klomp &Van Leeuwen, 2001; Hashi & Stojcic, 2010). These studies usually measured innovation by referring to innovation input. On the other side, a modern approach of the relationship between innovation and the corporate performance has emerged. This modern approach is based on models that suggest the need of focusing on the complex innovation process and also on the ways based on which the innovation effort can be superiorly harnessed into increased corporate performance. The basic pattern of this new trend is the four stages model of innovation process developed by Crepon, Duguet & Mairesse. (1998). The impact of innovation on company’s performance may vary depending on broad contextual factors (Rosenbusch, Brinckmann & Bausch., 2011). The most revealed factors affecting the relationship between innovation and corporate performance are: the industry and its dynamism, the company’s size and the nature of its activity and also the approached innovation types. In his demarche of illustrating the relationship between innovation and company’s performance in the context of industry dynamism, Thornhill (2006) showed that innovation is a determining factor for company’s performance. Thus, Thornhill (2006) has highlighted that the industry dynamism drives forward to innovation in companies and further, innovation boosts the company’s performance. He found that the level of company’s performance is influenced by the company’s knowledge, innovation and the level of industry’s dynamism. Coad & Rao (2008) have revealed that regardless of the industry, no company will survive without innovating, but Mansury & Love (2008) have concluded that the innovation impact on firm performance is different depending on the industry in which it operates. The effect of innovation on corporate performance is determined also by the nature of company’s activity. Thus, analyzing the relationship between innovation and corporate performance, Freel & Robson (2004) have revealed that the effect of innovation activities on corporate growth performance is different in service companies compared to manufacturing companies. Their study emphasized that incremental innovation processes carried out in service companies increases the company’s performance (measured by sales volume and productivity). Also, they have shown that, in a short-term view, product innovation processes implemented in manufacturing companies, either radical or incremental innovation, have a negative influence upon the evolution of sales volume and productivity, as measures of corporate performance. Damanpour, Walker & Avellaneda (2009) have conducted an analysis of the innovation activity of a panel of service companies from UK, trying to highlight the positive effect of innovation on company’s performance. In their study they demonstrated that, in order to have a positive effect of innovation on the service company's performance, adopting several innovation types and also a continuously changing the mixture of innovation types will help. This will allow gaining distinctive competencies for service companies and will reduce the imitation risk for services. Atalay, Anafarta & Sarvan (2013) investigated the link between innovation and corporate performance in 113 Turkish companies operating in a highly innovative industry that is among the most competitive industries worldwide.