Organizational Innovation Factors, Capabilities and Organizational Performance in Automotive Industry

The purpose of this study is to investigate the effects of external and internal innovation factors on organizational performance directly and through innovation capability in Iranian auto parts industries. This research used the quantitative research method and used the survey technique to gather data from 275 Iranian auto part manufacturing companies. The collected data was analysed using the structural equation modelling (SEM) based on Partial Least Squares (PLS) technique. The empirical results showed that the inclusion of organisational innovative capability has a profound effect on organisational performance of the selected Iranian auto parts companies. The findings have several theoretical and practical implications. The use of the resource-based theory for the Iranian manufacturing context is relevant and can be enhanced with different dimensions of innovation capability. In practical sense, Iranian auto part manufacturing organization should engage more in enhancing their innovation capability which will in turn magnify the role and effect of external and internal organizational factors.