Linking organizational innovation, firm growth and firm size

Purpose: The purpose of this research is to study the effect of organizational innovation, in terms of the introduction of both new business practices and new methods of organizing workplaces, on firm growth, along with the moderating role of the firm size in this relationship. Design/methodology/approach: It was analysed a panel sample of 4,125 Spanish innovative firms taken from the Technological Innovation Panel (PITEC) for the period 2009 to 2014. Two-step System-GMM approach and IV approach with 2SLS have been used. Findings: The findings remark the positive effect of organizational innovation on firm growth in case firms introduce both new business practices and new methods of organizing workplaces. Furthermore, the empirical evidences show that the firm size has a role, although partial, in moderating negatively the effect of introducing both new business practices and new methods of organizing workplaces on firm growth. Originality/value: The study adds some new theoretical insights and empirical evidences into the literature related to the inertia theory in the perspective of the population ecology, incorporating it with the effect of firm size. Furthermore, the study may represent a further part of the complex literature puzzle that links organizational innovation to firm growth and the inclusion of the moderating role of the firm size will partially provide a more deeply understanding of this link.