The Effect of Manufacturing Firm Innovation on Export Market Performance

Most previous studies on the relationship between innovation and performance are focused on technological innovations, while there is a lack of research on exploring the effect of firm innovation on performance and this is much so in the context of export performance. This study seeks to investigate the relationship between manufacturing firm innovation and export market performance of Malaysian manufacturing firms exporting to the Arab countries. The data were collected through self-administrated survey questionnaires distributed to the marketing managers or the officer who are awared of their respective manufacturing companies exporting to the Arab market selected from the 2011 Federation of Malaysian Manufacturers (FMM) directory. A total of 223 duly completed questionnaires were analyzed using the SPSS AMOS. The components for firm innovation are technical innovation, administrative innovation, market innovation and radical innovation, while the components for export market performance are export sales volume, export sales revenue, export profitability and export market share. It was found that firm innovation is significantly and strongly related to export market performance. The overall model explained a total of 72 percent of the variance in export market performance at p < 0.001. In short, it is obvious that Malaysian manufacturers exporting to the Arab countries should focus on their firm innovation to enhance their export market performance.