Relationship between Innovation, Quality Practices and Firm Performance: A Study of Service Sector Firms in Pakistan

Abstract

This study explains the relationship between innovations, quality practices and firm performance of service sector firms in Pakistan. The study discusses various types of innovation practices in the service sector based on the Oslo manual and then different types of quality practices based on the EFQM model for quality excellence. In this study a detailed questionnaire was developed to measure the relationship between innovations, quality practices and firm’s performance and data was collected from 157 service sector firms offering different types of services. The data was analyzed using different descriptive and inferential statistical techniques and reliability test, factor analysis, correlation analysis and regression analysis. The results show that innovations like organizational innovations have a positive relationship among management leadership, policy and strategy for quality then other innovation types while innovation results, employee results have a more positive relationship with process innovations and employee management techniques. Finally the study discusses the limitations and scope for future research in the area.