Question 11.93

11.93 Determinants of innovation capability.

A study of 367 Australian small/medium enterprise (SME) firms looked at the relationship between perceived innovation marketing capability and two marketing support capabilities, market orientation and management capability. All three variables were measured on the same scale such that a higher score implies a more positive perception.21 Given the relatively large sample size, the researchers grouped the firms into three size categories (micro, small, and medium) and analyzed each separately. The following table summarizes the results.

Micro

 Small

 Medium
Explanatory
variable
Market orientation 0.69 0.08 0.47 0.06 0.37 0.12
Management capability 0.14 0.08 0.39 0.06 0.38 0.12
F statistic 87.6 117.7 37.2
  1. For each firm size, test if these two explanatory variables together are helpful in predicting the perceived level of innovation capability. Make sure to specify degrees of freedom.
  2. Using the table, test if each explanatory variable is a helpful predictor given that the other variable is already in the model.
  3. Using the table and your results to parts (a) and (b), summarize the relationship between innovation capability and the two explanatory variables. Are there any differences in this relationship across different-sized firms?

11.93

(a) For Micro: are 2 and . For Small: are 2 and . For Medium: are 2 and . The two explanatory variables are helpful in predicting the perceived level of innovation capability for each firm size. (b) For Micro: , and Market Orientation is significant. , and Management Capability is not significant. For Small: , and Market Orientation is significant. , and Management Capability is significant. For Medium: , and Market Orientation is significant. , and Management Capability is significant. (c) For all three sizes, the overall model was very significant. However, for the Micro size, the Management Capability was not needed and was not significant given Market Orientation is in the model. For the other two sizes, Small and Medium, both variables tested significant at the 5% level, and both were useful in predicting perceived level of innovation capability.