The Influence of Innovation on Firm Performance in Brazil

This research aimed to study the relationship between innovation and variables that represent firm performance. Using a comprehensive database that cross references innovation information gathered by PINTEC (Technological Innovation Research) of IBGE (Brazilian Institute of Geography and Statistics) and financial information made available by Serasa and by Gazeta Mercantil, an evaluation of possible relationships between innovation and performance of Brazilian companies was performed. Factorial analysis and structural equation modeling techniques made it possible to identify latent variables associated with human capital, with innovative effort and with the relational capital of companies as well as relations between latent variables connected to the constructs of innovation and performance. It is emphasized that the study involves a large sample, which is uncommon in research on innovation in Brazil. With regards to the research problem, an attempt was made to investigate the relative influence of the variables that compose innovation on firm performance. More specifically, the following hypotheses were studied: (i) Investment in the firm's capacity to innovate has a positive influence on its performance, (ii) Investment in human capital has a positive influence on the firm's performance, (iii) Investment in relational capital has a positive influence on the firm's performance, (iv) Investment in the firm's innovative effort has a positive influence on its performance. The results of the application of the structural equation model suggest, for the sample of Brazilian companies, that variables associated with investments in innovation, which are connected to the innovative effort of a company, positively influence financial performance