Business and Management Factors Relating to Firm Innovation Performance

Dr. Naqeeb Ur Rehman .


The resource based theory emphasise the important of knowledge based resources for firm innovation performance. This study identified the firm knowledge based assets such as R&D, absorptive capacity, knowledge management and so forth. This research paper analyse the Pakistani software industry (i.e., at micro level) and provided contribution to the knowledge in terms of analysis of knowledge intensive sector by using cross sectional data techniques.  This empirical study is based on 2-month survey of 69 software firms in Islamabad region. Factor and stepwise probit regression analysis are used to examine the relationship between business and management factors and firm innovation performance. Firm size, strategic focus, culture and knowledge management have a positive impact on the firm’s innovation performance. In comparison, lifecycle, leadership abilities and absorptive capacity have negative association to firm performance. Overall, our empirical findings suggests that firms with low level of R&D, resource constraint, poor networks and less motivated employees affect the innovation performance of these software firms.


Absorptive Capacity, Innovation, R&D, SMEs

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