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INNOVATION, FIRM PERFORMANCE AND RISKINESS: EVIDENCE FROM THE LEADING WORLDWIDE INNOVATIVE FIRMS

ALI MURAD SYED

College of Business Administration, University of Dammam, Saudi Arabia

E-mail Address: amsyed@uod.edu.sa

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ZAHID RIAZ

Faculty of Business Administration, Lahore School of Economics, Pakistan

E-mail Address: zahidriaz@lahoreschool.edu.pk

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, and

ABDUL WAHEED

UCP Business School, University of Central Punjab, Pakistan

E-mail Address: a.waheed@ucp.edu.pk

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https://doi.org/10.1142/S1363919616500663Cited by:2 (Source: Crossref)

Abstract

The research and development (R&D) expenditure results in the innovation for any firm but affects the financial performance and riskiness of the firm at the same time. The relation among innovation, the riskiness of the firm and financial performance is discussed in this study. This study determined the impact of innovation on financial performance and also looked into the impact of innovation on riskiness of the firms. This study is conducted on the most innovative firms according to Forbes magazine over the period 1998–2012. Our findings show positive, significant and robust relationship between innovation and financial performance which is consistent with the existing literature. On the other hand, impact of innovation on riskiness is positive and significant which shows that more innovative firms are more riskier and ultimately profitability is increased for those firms.

Keywords:

JEL: O31, O33, G32

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