Modeling Factors Affecting Innovation Performance of the Firms in the Advanced Materials Sector in Iran: A Quantitative Approach Based on Structural Equations

The various factors affecting the firm’s innovation performance are strongly influenced by the contextual factors. Considering the economic and strategic importance of the Advanced Materials Sector in Iran, this paper attempts to model the factors influencing the innovation performance of the firms in this sector. For this purpose, a survey was carried out with participation of 169 companies as a statistical sample and the obtained data were modeled by structural equations modeling through the Partial Least Squares (PLS) method. The findings showed that although both internal and external determinants have a meaningful effect on the firm’s innovation performance, the effect of external determinants is higher. In addition, it was revealed that among the external determinants, characteristics of the business environment, characteristics of the science and technology environment and characteristics of the sector, respectively, have the greatest impact on firm innovation performance. Also, among the internal determinants, organizational competencies, strategic characteristics, and demographic characteristics of the firm have the most impact on the firm’s innovation performance. As the external determinants are mostly out of the control of the firms and their managers, and are more influenced by government policies, the high impact of these factors confirms the important role of the policymakers. The policy makers are able to have a significant impact on the firm’s innovation performance by designing and implementing effective policies.