Are all innovations equally performing? The case of Italian KIBS firms

In this paper we argue that service innovation is a multifaceted concept but existing studies do not fully account for the effect of different types of innovation on a firm’s performances. Coherently, we consider different types of innovation on the basis of their content and degree of novelty, distinguishing between product and process innovations new to the industry and new to the firm respectively. Differently from prior research, we develop our hypotheses on how innovations with different contents and degrees of novelty simultaneously relate to growth and productivity. We tested our hypotheses on a sample of 99 Italian KIBS firms. Results support the idea that highly innovative product innovations are more strongly associated with a KIBS firm’s growth, while weakly innovative process innovations are more strongly associated with a KIBS firm’s productivity, but only in small firms. Theoretical and managerial implications are drawn.