Innovation with high social benefits and corporate financial performance

Abstract

This article analyzes the effect that innovation with high social benefit has on financial performance, and to improve our understanding of this effect we extend our research by analyzing the effect of being an innovation leader has on financial performance. We intend to give insight about which innovation strategy impacts with more intensity on financial performance. To support this analysis we will make use of the resource-based view theory and the institutional theory. Our research used the panel data technique. The final sample contains 2025 observations for 418 firms. The results of this research demonstrate that there is a negative and significant effect between innovation with high social benefit and financial performance, highlighting the importance of the involvement of governmental and non-governmental institutions to create an incentive for firms to incur in innovative activities that produce social benefits. © Universidad Alberto Hurtado, Facultad de Economía y Negocios.