Toward an innovation-based perspective on company performance

Purpose – The purpose of this paper is to suggest an innovation-based perspective on company performance and develops a conceptual framework. Design/methodology/approach – This is a research paper, which builds on prior theoretical and empirical management research. Findings – The innovation-based view is grounded in interfirm differences in innovation, and it underscores the opportunities to achieve sustainable superior firm performance by innovating internally besides the increasing trend toward open innovation. The innovation-based perspective goes beyond many firms’ focus on product innovation by examining its interdependencies with other essential first-order innovations such as service, process, business model, and management innovations. The innovation-based perspective further addresses the dynamic and intertemporal transformation of innovation activities based on second-order innovations, which provide a more realistic view of organizations’ innovation over time. This transformation affects organizational boundaries and how a firm sustains superior performance. Originality/value – The innovation-based view revises extant approaches to competition and firm boundaries. The new arguments help to reconcile inconsistent earlier findings, and they deepen the understanding of interfirm differences in innovation and performance.