1 Organizational Innovations and Firm Performance. Evidences From the Case of Medium-Sized Milanese Firms

The empirical evidence of the past fifteen years has shown the existence of a positive relationship between the adoption of organizational innovations and a firm’s economic results. Yet there is less consensus on the conditions which make it possible for innovations to be converted into better performance. The dominant theory maintains that the effects are greater if the new practices are introduced in ‘bundles’, and if they are designed consistently with the firm’s other strategies, particularly those related to technological innovations. A broad strand in the economic literature argues for the existence of complementarities between the two types of innovation. However, it is still unclear what strategies are actually adopted by firms, and especially so in the case of Italy. Through analysis of an original sample of medium-sized firms in the Milanese area, this paper shows that organizational innovations have been introduced in a large part of firms, but in many cases the process of organizational change is not yet complete, so that the situation is largely one of ‘transition’. Analysis of the relationships with business performance instead shows that the firms which have achieved the largest productivity increases in the past five years are those which have combined investments in the new organization of work with advanced technologies. This therefore supports the dominant theory