Innovation and organizational performance: A critical review of the evidence and a research agenda

The notion that innovation is a route to higher levels of organizational performance in public agencies is examined in this critical review. Substantial support for the innovation-performance hypothesis is found in the published quantitative studies. The evidence first points towards the importance of simultaneously introducing product and process innovations and second highlights the mediating role that innovation plays in the management-performance relationship. The evidence does not, however, allow clear conclusions to be reached on where, when and how a strategy of organizational innovativeness should be pursued. Major conceptual, methodological and empirical issues are addressed in a research agenda.