Growing by exciting : a study of the effects of perceived firm innovativeness on customer satisfaction, customer loyalty, and firm performance

Abstract

Today’s increasing focus on innovation in competing for the customers’ attention, has become a highly relevant research topic. Yet most research has focused on customer satisfaction as the most important antecedent of loyalty, and that customer loyalty is a main indicator of enduring firm performance. Thus, previous research has only minimally considered the role of perceived firm innovativeness in relation to firm performance. In addition, most previous researchers have focused on innovativeness from a firm-based view. Consequently, the customer’s point of view, which is crucial for innovation efforts to succeed, is neglected, and there is scarce knowledge about how customers’ perceptions of the innovativeness of the firm can affect firm performance through the mediating factors of customer satisfaction and loyalty. Therefore, the goal of this study is to examine the way perceived firm innovativeness affects firm performance which is a part of the profitability picture, through the mediating effects of customer satisfaction and customer loyalty. Thereby, we aim to fill a gap within the field of innovativeness and firm performance.

After establishing a theoretical model with the prescribed relationships, we conducted a multiple-source secondary data study by using the respective indexes the Norwegian Innovation Index (NII) and the Norwegian Customer Barometer (NCB), in addition to financial data from annual reports and the Norwegian business finder service Proff. After analysing the respective variables by using the Hierarchical Linear Regression and Process Macro, we found that perceived firm innovativeness affects firm performance through the mediating effects of customer satisfaction and loyalty. We also found that perceived firm innovativeness has a stronger effect on customer loyalty than customer satisfaction has on loyalty, challenging the established theory that emphasises satisfaction as the most important antecedent of loyalty.