Do Managerial Practices Matter in Innovation and Firm Performance Relations? New Evidence from the UK.

The innovation and firm performance relationship remains a puzzle, as all types of innovation are not equally beneficial. Besides, better-managed firms can perform better. Integrating these two strands of literature, we examine whether managerial practices explain this relationship using data from UK firms during 1992-2014. We find that firms which focus on R&D activities jointly with better managerial practices benefit favourably. During the post-crisis period, higher intangibles are only beneficial when combined with R&D activity. Also firms with better managerial practices and innovative activities exhibit a positive effect of higher leverage. Finally, an inverse U-shaped result supports the Schumpeterian theory of creative destruction. [ABSTRACT FROM AUTHOR]