Transformations  in
Business & Economics

INNOVATION AND FINANCIAL PERFORMANCE OF A COMPANY: A STUDY FROM CZECH MANUFACTURING INDUSTRY
Nina Bockova, Ondrej Zizlavsky

ABSTRACT. The paper investigates the impact of innovation on the financial performance of a company. Its aim is to explore the relationship between innovation and performance of large companies in Czech manufacturing industry. The data was obtained from the Amadeus Bureau Van Dijk Electronic Publishing database and the Czech Statistical Office Database in the period of 2007 to 2014. We tested whether companies, which invest into innovation, achieve stronger financial performance and are better able to respond to an economic crisis. The results of a Mann-Whitney U test showed that the long-term financial performance of investigated companies is closely linked to their investment into innovation. Moreover, the authors of this article found that long-term innovations vary the ability of the company to succeed in the post-crisis period. The median value of companies with R&D expenditures proved an ability to regain the original value of profitability ratios ROE and ROA earlier than companies without R&D expenditures .

KEYWORDS:  innovation, financial performance, R&D expenditures, Mann-Whitney test, Czech Republic, manufacturing industry.

JEL classification:  C18, D22, M21, O32, P47.