The Effect of Strategic Innovation on Financial Performance in the Industrial Sector

摘要

The purpose of this study is to examine whether the innovation strategy can improve the performance of the company. Its innovations consist of product innovation, process innovation, and market innovation. The better innovation strategies undertaken by the company in creating products, production processes and marketing of new products will be able to improve the company's financial performance. This research was designed as causal studies. The research approach used in this study is quantitative at an explanatory level which aims to test the hypothesis of the influence of innovation on the company's financial performance. This study used a sample of 120 companies grouped in industrial sector in 2016. This research analysis uses a multiple linear regression approach. The suitability test of the model is done by assessing the coefficient of determination, simultaneous testing (F test), and partial testing (Statistic t test). The results of this study indicate that partially product innovation and market innovation affect the financial performance. In the process of model estimation in multiple linear regression, process innovation correlates with two other innovations, so that the process innovation variables are dropped by the system in the estimation process. Product innovation and market innovation significantly affect the financial performance that has positive ROA.