The role of organizational innovation in achieving and maintaining company’s business excellence

The dynamics of the contemporary environment with all its characteristics has greatly encouraged further research of the impact of innovation on the company's performance due to the paradigm that defines an innovation as means to enhance the competitiveness of enterprise. Thanks to the efforts of scientists, corporate managers and owners of capital can now choose from a variety of management tools to measure the innovation and success of the enterprise. In this paper, the methodology of Croatian Innovation Score (in Croatian: Hvatski Kvocijent Inovativnosti - HKI) is applied to assess the condition and the activities undertaken in order to build innovation capacity, and an assessment of the perception of innovation at the enterprise level, whereas the methodology of BEX index (Business Excellence Index) was used to measure business excellence of an enterprise. Applying the methodology on a sample of large manufacturing companies from Bosnia and Herzegovina, the composite innovation indices and business excellence indices were first calculated. The standard multiple regression has been applied to explain the relationship between innovation and business excellence of an enterprise. The results obtained in this research are encouraging and stimulating for the managers of the studied companies to strengthen the innovation capacity in order to advance on the business excellence ranking scale.(ProQuest: ... denotes formulae omitted.)1. INTRODUCTIONThis paper is based on the presumption that the implementation of innovation positively affects the financial performance of companies that are being assessed for their business excellence. In their research, Tidd, Bessant & Pavitt (2005) point out that companies which implement innovations in order to improve their processes and differentiate their products / services are significantly ahead of their competition in terms of market share, profitability, companies' growth, and net income. Urban and Hauser (1993) highlight innovation as being essential for creating a competitive advantage and company's subsistence, although innovation is at the same time extremely risky activity that constantly requires enormous financial and human resources. Bearing all the above in mind, the managers' task is to ensure the continuity of innovation. However, in order to reduce the business risks of investing in innovation they also need information about the efficiency and effectiveness of resources that the company has invested in the innovation process. Synchronization of innovation capacity development, strategy options, processes and innovation models not only considerably contribute to the risk reduction of investing in innovation, but it also leads to achieving company's business excellence.In this study, authors analyze the relationship between innovation and business excellence of large manufacturing companies from Bosnia and Herzegovina using the methodologies established by Croatian scholars that have been tested on Croatian companies (Antoljak, Mitrovic et al., 2011; Belak & Aljinovic, 2008). The study comprises 36 large manufacturing companies for which their composite index of innovation will be calculated so as to pre-calculate summary data for innovation capacity categories, innovation processes and strategies and for innovation results. Composite index of business excellence (BEX) is to be calculated for the sample companies. Business Excellence Model (BEX) evaluates the existing and expected business excellence. Hereafter, the paper explores the correlation between innovation and company's business excellence by using the HKI and BEX indices.The main objective of this paper is, using standard multiple regression, to determine the correlation between innovation and business excellence of large manufacturing enterprises in B&H based on composite innovation and business excellence indices, operationalized according to HKI (innovation) and BEX (business excellence) methodology. …