Innovation reputation and market capitalization: the moderations of firm size, industry, and asset efficiency

Abstract

Purpose – This study investigates the utility of innovation reputation in boosting stock market valuations by examining the influences of firm size, industry and asset efficiency on the focal relationship. Design/methodology/approach – The moderations were tested across two studies. Study 1 (N = 500) analyzed the influence of innovation reputation on market capitalization and the firm size moderation across manufacturing and service firms. Study 2 (N = 100) assessed the moderations of firm size and asset efficiency in high-vs low-innovation industries. Findings – Results indicate that innovation reputation significantly predicts market capitalization, with a stronger effect for larger firms. This moderation is more pronounced in service rather than in manufacturing firms. Further, asset efficiency moderates the focal relationship. Both the firm size and asset efficiency moderations are significant in low, rather than high-innovation industries. Research limitations/implications – Building off prior research that found the influence of innovation reputation on firm performance and the importance of considering industry in this relationship, this paper adds to the knowledge on this facet of firm reputation by providing evidence for the importance of also considering firm size and asset efficiency on its effect on market capitalization. Originality/value – This paper specifically emphasizes the need to consider firm size, industry and asset efficiency when seeking to employ innovation reputation to boost market capitalization, adding knowledge to the growing literature on the innovation facet of corporate reputation.