View of Does innovation strategy affect financial, social and environmental performance?

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Journal of Economics, Finance and Administrative Science

w w w . e l s e v i e r . e s / j e f a s

Article

Does innovation strategy affect financial, social and environmental performance?

Ferdaws Ezzi

^a,^∗

, Anis Jarboui

^b

aPHD,studentinFinancialandAccountingMethods:LARTIGESfax,UniversityofGabes,Gabes,Tunisia

bDoctorandHDRFinancialandAccountingassociateprofessorofUniversitiesHigherInstituteofBusinessAdministration(ISAAS),UniversityofSfax,Tunisia

a r t i c l e i n f o

Articlehistory:

Received28April2015 Accepted16March2016 JELclassification:

20 Keywords:

Innovationstrategy Socialperformance Financialperformance Environmentalperformance

a b s t r a c t

Intheverystudy,theemphasislaysonthespecificproblemofanalyzingtheimpactoftheinnovation strategy(inparticularinvestmentinresearchanddevelopment)onthefinancial,socialandenvironmentalperformance.Afterdiscussingthissubjecttheoretically,weproposeourresearchhypotheseswhich, inturn,willbecorroboratedbyanempiricalstudyof96Tunisiancompanies.Indeed,theresultsare noteworthyandimportanttotheextentthatonecansaythattheinnovationstrategyhasacrucial impactontheperformanceofthecompanies.

¿Afectalaestrategiadeinnovaciónalrendimientofinanciero,social yambiental?

CódigosJEL:

20

Palabrasclave:

Estrategiadeinnovación Rendimientosocial Rendimientofinanciero Rendimientoambiental

re s u m e n

Elénfasisdeesteestudiorecaesobreelproblemaespecíficodelanálisisdelimpactodelaestrategiade innovación(enconcreto,lasinversioneseninvestigaciónydesarrollo)sobreelrendimientofinanciero, socialyambiental.Despuésdeanalizaresteasuntodesdeelpuntodevistateórico,seproponeuna hipótesisdeinvestigaciónque,asuvez,deberásercorroboradaporunestudioempíricode96empresas tunecinas.Dehecho,losresultadossondestacadoseimportantes,ypermitendecirquelaestrategiade innovacióntieneunimpactocrucialenelrendimientodelasempresas.

1. Introduction

Inrecentyears,therehasbeenashiftfromasingle-criterion- performance model to a several-criteria performance model thatincorporatestheexpectationsofthedifferentstakeholders;

namely,theshareholders,thecustomers,theemployeesandsoon.

Theperformanceindicatorsareamajortoolofthemanagement

∗ Correspondingauthor.ISAAS,BP1013-3018Sfax-Tunisia,680450,University ofSfax,Sfax,Tunisia,Tel.:+0021674680460;fax:+0021674.

E-mailaddress:[email protected](F.Ezzi).

control system. Their importance resides in the performance measurementandinthecontroloftheresourceallocations.Accord- ingly,thecompanyisusuallyexpandedtomaximizenotonlyits financialperformancebutalsoitssocialandenvironmentalperfor- mance.Thisconceptispresentedasaprecautionarystakeholder modelestablishedbyFreeman(1984) whohighlightstheprob- lem of profitability. CSR was defined by Bowen (1953) as the prerequisitethat business leadersmust implement. CSRentails strategies, decisionsand practices that goalong withthe goals andvaluesofthecommunityingeneral.Inthe1990s,CSRbecame thecruxofthematterofthelong-lastingdevelopmentwithinthe company.

http://dx.doi.org/10.1016/j.jefas.2016.03.001

by-nc-nd/4.0/).

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F.Ezzi,A.Jarboui/JournalofEconomics,FinanceandAdministrativeScience21(2016)14–24 Thereafter,HoffmanandBansal(2012)statedthatcompanies

must considerthe environmentalissues as a strategic problem by focusing onthe relationship between the company and its environment. Caroll(1979)provided a conceptualmodel based onthreedimensions:theprinciples,manner,and thevalues of socialresponsibility.WartickandCochran(1985)maintainedCSR astheprincipleswhichincorporatethestructureofthisnotion;

theproceduresthatwereimplementedtodeveloptheabilitytobe sociallyresponsibleandthepoliciesresultingfromthissameabil- ity.Equallyimportant,Wood,George-Falvy,andDebowski(1991) proposedamodelthatincorporatestheprinciples,theprocedures, theorganizationalpracticesandresponsibilityaswellastheresults broughtaboutbytheactionsandthechoicescarriedoutbythe company.

Whereas,someresearcherskeepintegratingthestudyofthe relationshipsbetweenbusiness andenvironment (Business and NaturalEnvironment)inthefieldofstudyoftherelationshipof theconceptCSR.Therelationbetweenthisconceptandthefinan- cialperformancebuildstheconceptoftotalperformance.Hence, thecompanygrowssoastomaximizenotonlyitsfinancialperfor- mancebutalsoitssocialandenvironmentalperformance.So,the companychoosestobeestablishedinseveralprojects,strategies andotherswhichaimatgrowth,profitabilityandperennial.Inthis context,companiesareseekingtobedistinctiveeitherbycreating, renewingormaintainingbymeansofinnovationanddiversifica- tionthroughtheirdivisions.Therefore,itresortstosetupinseveral projects,strategies and others which aimat growth,profitabil- ityandsustainability.Hence,thestudyoftheeffectofinnovation onthecorporateperformancebecomes akeyissue.Meanwhile, wewilltrytofindananswertothequestionoftheeffectofthe innovationstrategyonthefinancial,socialandenvironmentalper- formancebyreferringtothetheoriesthathaveshowntheeffectof theinnovationstrategyonthebusinessperformance.

Ourobjectiveistostudytheeffectofinnovationstrategyonthe financial,socialand environmentalperformanceof theTunisian companies;themaincontributionofthisworkistoexplainhow theinnovationstrategycanaffectnotonlyfinancialperformance butalsosocialandenvironmentalperformance,thatweappliedthe methodofratingagencyKLDtotheTunisiancompanies.Theresults arenoteworthyandimportanttotheextentthatonecansaythat theinnovationstrategyhasacrucialimpactontheperformanceof thecompanies.

This article is structured as follows: Section 2 presents the relatedliteratureandthetheorieswhichmotivatetheempirical work;Section3presentsthehypotheseswillbetested,Section4 discussestheempiricalstrategiesthatwereadopted;andSection 5presentsthemainresultsanddiscussion.

2. Thetheoreticalgroundsfortherelationshipbetweenthe innovationstrategyandtheperformancecompanies

Many theorieshave addressedthe relationshipbetweenthe innovation strategy and thecorporate performance in orderto answerthequestionof theeffectof thestrategicchoiceonthe businessperformance.

2.1. Industrialapproach

ThisapproachstemsfromtheworkofMason(1939)andBain (1951)inindustrial economics.Suchanapproach considersthe effect of theindustrial structure on thetypes of the strategies adopted by the companies which explain the business performance.Again,theworksofCavesand Porter(1977)affirmthat thecompanycanbesuccessfulonlywhenitoccupiesaremarkable

positionintheproductmarketandmaintainsitbysettingbarriers attheentry(accordingtotheindustrialapproach).

2.2. TheChicagoSchool

Inthisschool,businessesaredifferentanddonothavethesame skillstoachievethesameperformance.So,theskillsoftheindivid- ualsandtheworkteamsthatmakeupthebusinessplayasignificant roleinthestrategicchoicewithinthecompanies.Thisrolehasan effectonthecorporateperformancewhenthecompanyismore efficientthanitscompetitors.(Demsetz,1975;Stigler,1964).In thiscontext,thestrategicchoiceaffectsthebusinessperformance sincethedifferencesintheefficienciesstemmingfromthischoice haveadirectimpactonthecorporateperformance.

2.3. Theresource-basedview

Thistheoryemergedinthemid1980sintheworkofRumelt (1984)andBarney(1985).Durant(1997)saysthat“thedevelop- mentof thefirmdependsnot onlyonitsexternalpositionand thedefensivegametowhichitissubject,butapartofitssuccess alsodependsontheresourcesthatitpossessesandonthewayit behavestooffertheservicestoitscustomers”.Inthistheory,the companyisacombinationofnaturalproductiveresources,phys- icalandhuman;theycanbebothtangibleandintangible.With theseresources,itcancreateacompetitiveadvantage;thatisto say,itsperformanceishigherthanitscompetitors’(Penrose,1959;

Barney,1991,1985;Grant,1991).AccordingtoPorter(1986),the competitiveadvantage“mainlyliesinthevaluethatafirmisable tocreateforitscustomers”.Theresourceis“anappropriateand relevanttheoreticalframeworktoreallyunderstandtheoriginof thefirms’performance”:Referringtothistheory,recentresearches areinclinedtotherelationshipbetweeninnovation(intermsof product,market,labor,culture...)andorganizationalperformance.

Inacomplexinnovative,unstableandturbulentenvironment,the companiescanadaptthankstotheirinternalresourcesandskills.

Wernerfelt(1984)showsthatacompanythatisableenoughto developanduseitsskillsandstrategicresourcesismoreefficient thanonethatisunabletomanageitsinternalskillsandresources.

Accordingtothistheory,innovationmaycarryannuitiesduetothe differenceinefficiencybetweencompanies(ifdifferentfromthe ChicagoSchool).Thecompanyresourcescanbethekeyofitssuc- cessbecausetheyenableittoincreaseitsproductionandtocreate values(Hunt,2000,Hunt&Morgan,1995).Thecompanieswith goodresourcesandskills,infact,choosethebeststrategiestopro- duceeffectiveandefficientproductsthatmeetthecustomerneeds;

thatishowsocialperformancecanbefulfilled.

2.4. Theagencytheory

Theagencytheoryhighlightstheconflictsofinterestbetween thestakeholdersinthefirm.AccordingtoAlbouy(2006),“tocre- atevaluefortheshareholdersistohavethecustomerssatisfied withthegoodproducts,developedbymotivatedemployeesand quality,together withthebestsuppliersand subcontractorsby complyingwiththeregulationsimposed bytheauthorities”.In thiscontext,itisworthmentioningthatthedecisionofinnova- tioninanuncertainprojectmayincreasetheconflictsofinterest betweentheshareholdersandthemanagersbecausetheydonot havethesamedegreeofriskaversion.Inotherwords,theshare- holdersarewillingtoendureahigherlevelofriskthantheleaders sincetheyhaveadiversifiedportfoliothatassumesthatdiversifi- cationreducestherisk.Incontrast,theleaderchoosesalessrisky strategytoguaranteetheemploymentsecurityandtheshort-term profitabilitysincehiswealthdependstoagreatextentonthevalue ofthecompanythatherunswhichwouldbeintheinterestsof

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F.Ezzi,A.Jarboui/JournalofEconomics,FinanceandAdministrativeScience21(2016)14–24 shareholders(Charreaux,1993).Thiscanleadtomajorinvestment

issues(Porter,1992):theefficientallocationproblemsofcorporate resources(Jensen&Meckling,1976)whicharetheagencycosts.

2.5. Thetransactioncoststheory

Williamson(1994)analyzestheinvestmentdecisionasapar- ticular transactionin which the degree of the asset specificity playsanimportantrole. Thetransactioncostsare presentedby Coase(1937)and,then,takenupand developedbyWilliamson (1975).Thesecostsaremanyandincludetheinformationsearch costsandnegotiationbeforesigningacontract(exantetransac- tioncosts)andthecostsofmonitoringtheimplementationofthis agreementaftersigningthecontract(exposttransactioncosts).

Williamson(1985) thinks that a couple of behavioral concepts result from these costs: bounded rationality and opportunism.

Thesetwofactorsexplainthefailureofthemarketstofunction efficiently.Simon (1957)argues thatboundedrationality isthe cognitivehypothesisonwhichtheeconomyoftransactioncosts isbased(Williamson,1993).Infact,itistheinabilityoftheagents tobefullyinformedandtotreatallthereliableinformationavail- ablewhich leadstoincompletecontractsand totheemergence ofthephenomenonofopportunisticbehavior.Indeed,Williamson (1993)developedtheconceptofopportunismwhichmeansthat theagentsseektoservetheirownpersonalinterests.According toBrousseau(1993)“theofficersaresufficientlyrationaltotryto benefitfromthegapsandshortcomingsofthecontractualarrange- mentstheyestablish”.Indeed,Williamson(1994)distinguishestwo typesofopportunism:thefirstistheexanteopportunismwhich consistsinthemanipulationorthenon-disclosureofinformation priortotheawardofacontracttoobtainabetterdeal.Thesecond istheexpostopportunismthatisthetemptationofthecontracting partiestochangethetermsofthecontract.Hence,therecomesthe incompletenessofcontractsbetweentheagents(moralrisk).

2.6. Astrategicapproach

Unlike the agency theory that does not effectively describe themanagerialbehavior,Lane,Kasian,Owens,andMarsh(1998) saythattheleaderswillnotbeselfishandopportunisticiftheir interestsarenotdirectlyandclearlyatstake.Consequently,the share-structureisslightlyrelatedtodiversification.Theexplana- tionofthestrategicdecisionsbasedontheshareholders’controlis notsatisfactorybecausetheoutsideshareholders,eventhemajor- ity, do not have enough information to evaluate the strategic decisions.Aspartofthestrategictheoriesofcorporategovernance, theboardofdirectorsisconsideredacognitivetoolhelpingtocre- ateskills(Charreaux,2000).Thesetheoriesalsoassigntheboard ofdirectorsadifferentrolefromthatinthecontractualtheories (financialandpartnership).Indeed,Charreaux(2000)believesthat

“theintangiblenatureoftheneweconomyandtheroleplayedby innovationandknowledgemakeusreconsiderthecorporategov- ernanceand,therefore,thefunctionoftheBoardofDirectors”.The Boardofdirectorsfacilitatesthedevelopmentofskillsandassists intheproductionofnewopportunities;inshort,itcontributesto theinnovationprocess.

2.7. Thestewardshiptheory

Thereisa bigdifferencebetweentheagencytheoryandthe stewardshiptheory.Thefirstproposesaconceptionofmanasan actorwitharationalcharacterseekingtomaximizehisinterests;

itis an economicapproach based ontheleaders’ opportunism.

Thesecondisbasedonasociologicalandpsychologicalapproach inwhichtheagentseekstomaximizehisinterestbyrespecting theinterestsoftheorganizationtowhichhebelongs(Donaldson,

1990;Donaldson&Davis,1991;Davis,Schoorman&Donaldson, 1997);hence,theconvergenceisbetweentheshareholdersand themanagers.Inthistheory,theboardofdirectorscanplayitsrole (Charreaux,2000)thisapproachproposestogobeyondthemain limitationsoftheagencytheoryinwhichthemanagersbehaveas

“goodstewards”whoarenotnecessarilymotivatedbyindividu- alisticgoals.Theirobjectivescaneasilyconvergeonthoseofthe shareholders.Indeed,themanagermayagreeonahighvalueof cooperation. Thistheoryis not limited totheissueof financial incentives,butitrecognizesanumberofnon-financialreasons(R&

D)ofmanagerialbehaviorandgivesanintrinsicmotivationtoact infavoroftheinterestsoftheorganizationwithoutanyneedtoan externalcontrolandsupportstheideaoftheactiveschoolwhich enhancesthestrategicroleoftheboardofdirectors(Hung,1998;

Stiles,2001).Thismotivationleadstoalong-termtrustbetween theofficerandtheshareholder.AccordingtoMuthandDonaldson (1998)“theboardsdominatedbyinsidedirectorscontributetothe depthofknowledge,expertiseandthecommitmentofthefirm;

thus,thisfacilitatestheboardtoplayitsactivestrategicrole”.

2.8. Thecognitivetheory

“The governance theories do not aimto study the waythe leaders reign —which would lead to confuse governance and management—butthewaytheyaregoverned”.(Charreaux,2004).

Theworks of Berle andMeans (1932)arethe firsttohighlight thebirthofthecorporategovernanceconceptbyintroducingthe impact of property on the business performance. They deduce thatthelargertheleader’scapitalinthecompanyis,thehigher thefinancialperformancewillbe(financialgovernance)(Jensen&

Meckling,1976;Daily,Dalton,&Cannella,2003).Likethestew- ardshiptheory,thecognitivetheoryisalsocharacterizedbythe fact ofimprovingtheefficiency of theleaders inthe company.

Thisefficiencyallowscreatingthevaluethatrequiresresearchand developmentaswellasmanagerialskills(Wirtz,2006).Theofficer willbecautiousofhisdecisionssincetheyinfluenceperformance (Rindova,1999;Charreaux,2004).Thecognitivetheoryislinked totheleader’sbehavior.Therefore,anewtheoryisborn;namely, thebehavioralgovernance(Charreaux,2011).Thebehavioralbiases affecttheagencycosts(Charreaux,2011).“Proposeanintegrating approachtothelatitudethatcanofferabetterunderstandingofthe relationshipbetweenthecharacteristicsoftheleader,governance andthefirmperformance”(Charreaux,2008a,b).Inthis,Charreaux combinesthedifferenttheories(cognitive,behavioral,disciplinary, andstrategic)inamodelthatcharacterizestheupperlevelstheory (Hambrick&Mason,1984).Itisbasedonthefactthattheenviron- menthasadirecteffectonthetypeoftheleaderwhointurnaffects thestrategicchoicesandtheperformanceofthefirm.Accordingto Charreaux(2011),thecognitivetheoryattachesimportancetothe capacityofthefirmtoinnovate,tocreatetheinvestmentoppor- tunitiesandtochangetheenvironment.“Thefirmisabletolearn andtocreateknowledge.Thus,thenotionsoflearning,competence andinnovationhavebecomeincreasinglycrucialtounderstandthe valuecreationprocess.Therefore,governanceisapprehendedbyits abilitytoinfluencethecreationofvaluethroughthecognitivelever;

forexample,byfacilitatinginnovation.Suchaconceptisassociated withthe«cognitive”modelofgovernance“.

3. Thehypothesestobetested

Whentheystudiedtheeffectsoftheorganizationalcharacter- isticsontheabilityofthefirmtoinnovate,HageandAiken(1970) showedhowitiscomplextoknowthenumberofspecialtieswithin thefirm ispositivelyrelated totheinnovationcapacity.Equally important,Grabmeier(2002)statedthat“diversifiedfirmsaremore

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F.Ezzi,A.Jarboui/JournalofEconomics,FinanceandAdministrativeScience21(2016)14–24 innovativethanthespecializedonesinthecreationofnewprod-

uctsandintheinvestmentinresearchanddevelopment”.Others arguethatthediversifiedfirmsinvestmorethanthespecialized companiesinR&Dactivities.Inthissection,wewilltrytoverify theeffectoftheinnovationstrategyonthecorporateperformance.

3.1. Therelationbetweenresearchanddevelopment(R&D)and financialperformance

Manystudieshavekepta wakingeyeonthistopictobetter understandtherelationshipthatmayexistbetweeninnovationand financialperformance.Generally,suchresearchesconfirmthepos- itiveeffectofinvestmentinR&Donthecorporateperformance.

Thisrelationshiphasbeenconsideredbyseveralresearcherssuch asSchrollandMild(2011),VandeVrande,DeJong,Vanhaverbeke, andRochemont(2009),BörjessonandLöfsten(2012),Colombo, Laursen, Magnusson, and Rossi-Lamastra (2012), and Parida, Westerberg,andFrishammar(2012).

ThestudyofDelMonteandPapagni(2003)showsthatthefirms thatareengagedintheR&Dactivitieshaveahighergrowthrate thantheonesthose arenot.Additionally, Geroski,Machin,and Walters(1997)findapositiverelationshipbetweeninnovationand thecompetitivenessofthefirmand,thus,itsperformance.

JohnsonandPazderka(1993)arguethatthereisapositiverela- tionshipbetweenR&Dandthemarketvalueofa firm.Berrone, Surroca,andTribo(2007)thinkthatinvestmentinR&Dhasasig- nificanteffectonthecompanyperformance.Yet,Kothari,Laguerre, andLeone(1998)arguethattheinnovationbasedonR&Dismore uncertainthaninvestmentinequipment.Thismayadverselyaffect thebusinessperformance.

O’Brien (2003), however, concludes that investment in R&D improvesthecompetitivenessofthecompany.Griliches(1981), HirscheyandWeygett,1985;CockburnandGriliches(1988),and Hall(2000)arguethatthecompanymarketvalueisafunctionof themarketvalueofthecompany’stangibleandintangibleassets.

TheR&Dexpendituresarepositivelyandsignificantlycorrelated withthemarketvalueofthebusiness.

Ben-Zion (1984), Connolly and Hirschey (1984) and Pakes (1985)comeupwiththesameresult:apositiveandsignificantrela- tionshipbetweentheR&Dexpendituresandthemarketvalueof thefirm.ThisresultisalsosubstantiatedbythestudiesofBlundell, Griffith,andVan Reenen (1999)and Toivanen,Stonenman, and Bosworth(2002).Also,thestudyofBaeandKim(2003)wascon- ductedinthreecontexts:American,GermanandJapanese.Itshows thattheeffectoftheinvestmentinR&Donthemarketvalueofa firmispositiveandsignificantinallcountriesandisstrongerinthe caseoftheJapanesecompanies.Inthiscontext,severalstudiesfind apositivecorrelationbetweenR&Dandthemarketvalue(Hirschey

&Weygett,1985;Chung&Jo,1996;Agrawal&Jayaraman,1994;

Bosworth&Rogers,1998andCockburn&Griliches,1988).

EricksonandJacobson(1992)concludethat theR&Dexpen- diture of a firm is positively related to financial performance.

Yew,Mira,and Chee (2006)declare theexistenceof a positive relationship betweentheinvestment in R&D and thecompany growthopportunities.Nevertheless,thestudiesofHung,Lee,and Lin(2006)comeupwiththefactthatsucharelationshipisnotsig- nificant.Merino,Srinivasan,andSrivastava(2006)thinkthatthe R&Dexpenditureshavenosignificanteffectontheshare-value.

Jarrell,Lehn,andMarr(1985),Woolridge(1988)andWoolridge andSnow(1990)believethatthefinancialmarketreactspositively whentheinvestmentinresearchanddevelopmentisannounced.

Infact,theseresultsareconfirmedbyLichtenbergandSiegel(1991) andJohn,John,andSundaram(1996)andBloch(2003)andChan, Faff,Gharghori,andHo(2007)showtheexistenceofasignificant andpositiverelationshipbetweenthestockreturnsandR&D.

TheresearchofChanetal.(1990),ZantoutandTsetskos(1994) and Szewczyk, Tsetsekos, and Zantout (1996), show that the announcement of the increase in R&D expenditures positively affects the returns of securities. According to Lantz and Sahut (2005), the investment in R&D has a significant effect on the financialperformanceintermsofprofitabilityandrisk.Sougiannis (1994)concludesthatthereisacorrelationthatimpliestheexist- enceofasignificantandpositiverelationshipbetweenR&Dand theoperatingincomes.Incontrast,thestudyofCastaetal.(2007) showsthattheR&Dcostshaveanegativeimpactontheoperating income.Tosumup,thepreviousstudiestendtopresentconclusive resultsabouttheimpactofR&Dexpendituresontheperformance ofacompany.Thisimpactcanbeeitherpositiveornegative.

Itisinthissenseourfourthassumptionismade.

H1. InvestmentinR&Dhasa(positiveornegative)effectonthe financialperformanceofacompany.

Thecompanieshavetofaceanewdimensionofprofitandper- formance.Itisthesocialperformance.Indeed,Quairel(2006)thinks thatthecompanymustshowthatitis“economicallyviable,socially responsible and environmentally sound”. So, we must wonder abouttheimpactoftheinnovationstrategyonthesocialperfor- mance.

3.2. TheimpactofR&Donthecorporatesocialperformance Thisnewdimensionrequiresthebusinessenterprisetobepart ofthesocialchange.Thegoalofinnovationistoachieveanewkind ofbalancethatnotonlytakesintoaccountthefinancialperfor- mancebutalsoincludesresponsibilitiesrelatedtothesustainable development.AccordingtoOltraandSaintJean(2011),theintegra- tionofinnovationinthecompanyisaresponsetothecustomer’s requests.

ForFlorida(1996),thecustomer’sdemandhelpscarryoutinno- vationwithinthecompany.TheeconometricresultsofHorbach (2008)confirm theassumptionthattheexisting demandmoti- vatesthecompaniestoinnovate.So,thegoalofeverybusiness is to meet theexpectations of thecustomers; thus,innovation positivelyaffectsthesocialperformanceofthecompany.Levand Sougiannis(1996)showtheexistenceofadirectandpositivecor- relationbetween investmentin research and developmentand performance(intermsoftheshareholders’satisfaction).

GroffandNguyen(2012)assertthehighsignificanceofthevari- able“actualoranticipateddemand”forproductinnovationsforall sectors(canbecustomerdemand,customersorshareholders).Itis thenotionofstakeholdersthatcomeshere.Accordingtothework ofGallaud,Martin,Reboud,andTanguy(2012),“demandcaninte- gratetheincentiveroleofthegroup,shareholders,suppliersoreven theemployees”.

Accordingtothestakeholdertheory(Freeman,1984),theinsti- tutions“shouldtakeintoaccounttheconflictingexpectationsof thedifferentinterestgroups”.Incontrast,Simpson,Siguaw,and EnzCathy(2006)believethatinnovationiscostlyandrisky;itnega- tivelyaffectstheresultsandincreasesthecostsandtheemployees’

dissatisfaction.Accordingly,onemaysaythatthereisanegative relationshipbetweeninnovationandsocialperformance.

Theseresultsdenotethattherelationshipbetweeninnovation andsocialperformanceiscomplexandrequiresmoreresearch.But mostempiricalstudiessuggestapositiverelationshipbetweenthe innovationstrategyandthesocialperformanceofthecompanies.

Hence,ourhypothesiswillexplorewhether:

H2. Theinnovationstrategyhasapositiveimpactonthecorporate socialperformance.

Besides thefinancial and social performance, today we talk aboutanewconceptofperformancethatcanhavearelationship

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F.Ezzi,A.Jarboui/JournalofEconomics,FinanceandAdministrativeScience21(2016)14–24 withtheinnovationstrategybecausethewaysofthinking keep

changingandthecompaniesalwaysseektofulfillthesatisfaction ofthecustomers,theemployeesandsoon.Therefore,theconcept ofenvironmentalperformanceevolves.

3.3. TheimpactofR&Dontheenvironmentalperformanceofthe companies

Kempetal.(1994)arguethatthe“techniques,processesand productscaneliminateorreducetheemissionofpollutantsand/or theuse of raw materials, natural resources and energy”. Oltra (2008)considerstheimpactofinnovationontheenvironmental performanceisbasednotonlyonresearchanddevelopment,but alsoontechnologysincetheexistenceofnewtechnologiesurges thecompanies toinnovate and todevelop newenvironmental approaches.

Brouillat(2008) arguesthat thecompaniesaremore or less encouraged to engage in environmental trajectories that may requirehighinternalresearchefforts(R&D).Freeman(1984)state thatinnovationbychangingthe“technologicalsystems”upsetsthe technicalandeconomicfoundationsofindustry.

TheworksofBakerandSinkula(2002),Balkin,Markaman,and Gómez-Mejía(2000);DarrochandMcNaugton(2002),Lyonand Ferrier(2002),Scherer(1992),Utterback(1994)Vrakking(1990) andWolfe(1994)showthatinnovationenablesthecompanyto copewiththeenvironmentalchangesand,subsequently,research anddevelopmentisveryimportanttoachieveenvironmentalper- formance.

Therefore,onemayproclaimthatthereisapositiverelation- shipbetweeninnovationandenvironmentalperformance.Besides, Brownand Eisenhard (1995) and Miles and Snow (1978) have shown,aftertheenvironmentturbulence,thatthecompaniesthat areabletoinnovatecanchallengeenvironmentalproblemsbet- terthannon-innovativeones.Theycanalsotakeadvantageofthe marketopportunities.Additionally,Wright,Palmer,andPerkings (2005)arguethatthesametypeofenvironmentalchangecanalter theeffectofthisstrategyontheenvironmentalperformance.

According to these works about small businesses, innova- tionhasnoeffectontheenvironmentalperformanceof benign environments, but it hasa positive effect on the environmen- talperformanceinhostileenvironments.Encaoua,Hall,Laisney, and Mairesse (1998) assume that investment in research and developmentis anuncertainstrategyandnegatively affectsthe business performance “the performance related to innovation actuallydepends onthreetypesofuncertaintiesthatinnovative companieshavetoface:technologicaluncertainty,strategicuncer- taintyandmarketuncertainty.Technologicaluncertaintymaybe facedbyacompanywhenthelatterdecidestodevoteaneffortto R&Dinanattempttoimplementadiscovery”.

Beforehand,itisnotsurethatitwillhavethenecessaryexper- tisetoturnthediscoveryintoatechnicallyviableindustrialproject.

Strategicuncertaintymeansthatwhenacompanyspendsmoney onthedevelopmentofanindustrialproject,itisnotsurethatitwill bethefirsttobringthecorrespondinginnovationtothemarket.

Marketuncertainty,finally,returnstothepotentialopportunities ofinnovation.Theirexistenceisrarelyachievedwhenthecom- panychoosesanindustrialdevelopmentproject.Forbusinesses, thisuncertaintyisoftenthemostdifficulttoovercome.Also,the commercialperformance of innovation depends on this uncer- tainty.Withreferencetotheseworks,onecanproclaimthenext hypothesis:

H3. Researchanddevelopmenthasasignificantimpactonenvi- ronmentalperformance.

Table1

Sampledistribution.

Industry Numberofbusiness %

Chemistry 5 5,2%

Distribution 2 2,083%

Foodprocessing 15 15,625%

Transportation 2 2,083%

Industries 15 15,625%

Computer 9 9,375%

Consumerservices 31 32,291%

Otherconsumergoods 3 3,125%

Buildings 2 2,083%

Services 12 12,5%

Total 96 100

Source:www.tustex.com

4. Methodology

Ourstudyis aimedat investigatingtheeffectoftheinnova- tionstrategyontheperformancecompanies.Thus,thisresearch attemptstoanswerourcentralquestion:Howcaninnovationaffect theperformanceofTunisiancompanies?Ourmethodologyconsists oftwoparts.Thefirstisusedtoidentifythedatacollectionmethod andthesecondisdevotedtotheresultsinterpretation.

4.1. Sample

Oursampleinvolves96Tunisiancompanieswithhighlevelon researchanddevelopmentdividedinto10industrieswhichare:

chemistry,distribution,foodprocessing,transportation,industries, computer,otherconsumer goods,consumerservices,buildings, and services. Companies belonging to the financial sector are excluded(banks,insurancecompany...)becausetheyhaveaunique financialstructure.Table1summarizesthedistributionofthesam- plebyindustries.

4.2. Collectionandthedatasources

Ourpurposeistoverifytheroleofinnovationstrategyinper- formance. So, weneed toknow aboutthe dataconcerningthe innovation strategy, social performance, environmental perfor- manceandfinancialperformance.Regardinginnovationstrategic, wegatheredtheneededdatafromtheannualreportsofthelisted companiesontheTunisiantustexsite,accessedtheweb-sitesofthe unlistedcompaniesandcontactedthembymail,faxandtelephone tofindoutthenecessaryinformationtomeasurethisvariable.By usingaquestionnaire,wemeasuredsocialperformanceandenvi- ronmentalperformance(thequestionnaireissenttotheleaderof thecompanieswhichhaveahighlevelofinvestmentinresearch anddevelopment).Thedatacollectionwascarriedoutin2013.We usedseveralmethodstogatherinformation:personalinvestiga- tion(byappointment:directinterviewwiththecompanyleaderof adurationof45minutes),telephonesurvey,faxinquiryandinter- netsurvey.TheMinistryof Tunisianindustryaswellasseveral businesscenters,namelythebusinesscenterofSfax,helpedus.

Thequestionnairewasbasedonthedimensionsthatseekto assess the companymanagement withrespect to its stakehol- ders(employees,customers,suppliers,shareholders,etc.).Inthe Tunisiancontext,theconceptofsocialperformanceislimitedand restricted.Therefore, we limitedthis performance tofourmain areas:employees,customers,community,country.

4.3. Variables

Inthiscontext,itisappropriatetoseparatethedependentvari- ablesfromindependentones:

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F.Ezzi,A.Jarboui/JournalofEconomics,FinanceandAdministrativeScience21(2016)14–24

4.3.1. Measurementofthedependentvariables

Thedependentvariablesarethethreeformsofperformance:

financial performance,social performance and, finally, environmentalperformance.

4.3.1.1. Financialperformance(FP). Itismeasuredthroughseveral methodssuchasROA,ROE(detailedinthefirstchapter).Tomea- surefinancialperformance,weusedReturnonEquity(ROE)which isusedbymanyauthorssuchasBrownandCaylor(2004).

The“returnonequity”or“equityreturn rate”orthe“equity return”istheratiobetweenthenetincomeandtheshareholders’

equity.Itmeasurestheabilityofabusinesstogenerateprofitsfrom itsnetequity.Thedataisextractedfromtheincomestatementsof thesamplefirmsfortheyearsfrom2009to2013.Accordingto thesedata,wecalculatedtheROEforeachyear.Onthisbasis,we calculatedtheaverageROE2009-2013.

ROE=Netincome/equity

4.3.1.2. Social and environmental performance. In the previous paragraph,wehaveshownthatwehaveadoptedaquestionnaire tocalculatethesocialandenvironmentalperformance.Wehave adoptedthemethodologyoftheKLD¹(Kinder,Lydenberg,Domini) ratingagencytomeasurethedependentvariableswhicharethe socialandenvironmentalperformance.

•Socialperformance:wehave4axes:

-Customerrelationships:weused8itemstomeasurethefirms’

socialinvolvementregardingtheirrelationshipswiththeircus- tomersintermsofloyalty,satisfactionandencouragement.For eachfirm,weassignedascorerangingfrom0(noitemistaken intoaccount)toamaximumof8(allelementsaretakeninto account).Then,webroughtbackthenumbertoavalueranging from0to1bydividingthetotalby8.

-Therelationshipwiththeemployees:asweused8itemsfor customers,wemeasuredthisvariableinthesameway;ascore rangingfrom0(noitemistakenintoaccount)toamaximumof 8(allelementsaretakenintoaccount).Then,webroughtback thenumbertoavaluerangingfrom0to1bydividingthetotal by8.

-Therelationshipwiththecountryandcommunity:eachaxis took3 items tocheck thesocial responsibility relationship, communityandterritory(withthesamemethodofcalcula- tion).

-Finally,tocalculatesocialperformance,thesumofthefouraxes isdividedbyfour.

SocialPerformance(SP)

=(clients’aggregatescore+employees’aggregatescore +communityaggregatescore+territoryaggregatescore)/4

•Environmentalperformance: is calculated onthe basis of 6 itemswhichare definedtomeasurethefirms’environmental performance.Foreachfirm,ascorerangingfrom0(noitemis takenintoaccount)toamaximumof6(allitemsareconsidered).

Then,webroughtbackthenumbertoavaluerangingfrom0to 1bydividingthetotalby6.

EnvironmentalPerformance(EP)=(

items)/6

1RatingagencywhichestimateslargecompaniesquotedAmericans(together oftheindication(index)Russel3000)accordingtoaseriesofcriteriaofexclu- sion(example:alcohol,tobaccos...)andofcriteriaofevaluation(Humanresources, environment,sponsorship,customers...).

4.3.2. Measurementofindependentvariable

Here,wetalkaboutthemeasurementofinnovationstrategy.

4.3.2.1. Innovationstrategy(investmentinresearchanddevelopment (R&D)). We usetheresearch and development(R&D) intensity as a proxy for firm innovation strategy. As Francis and Smith (1995),Cho(1998),Abdullah,Weiyu,andVivek(2002),Azouziand Jarboui(2012),andHamzaandJarboui(2012),istheratiobetween R&Dexpenseand totalsales.Thismeasurementis usedalsoby Sumeonidis(1996),KleinandRosenberg(1986),GellatlyandPeters (1999),Miller(2006)andGhesbrough, Vanhaverbeke,and West (2006).

Researchanddevelopment(R&D)

=Researchanddevelopmentexpenses/totalsales

4.3.3. Measurementofthecontrolvariables

Inourmodel,weincludedfourcontrolvariableswhichexplain thelevelofbusinessperformance.Thesevariablesareproxiesof thefirmsize,debt,ageandindustry.

4.3.3.1. Debt. Hovakimian,Hovakimian,andTehranian(2004)uti- lizedthetotal debtratio,butMyers(2001)used thelong-term averagedebtratio.Nevertheless,IONmeasuredthisvariableby usingthefinancialleveragewhichresidesinthetotaldebtdivided bythetotalassets.ThismeasurementisalsousedbyKochharand David(1996),BarkerandMueller(2002),LeeandO’Neil(2003),Koh (2003),DemariaandDufour(2007),JarbouiandOlivero(2008),Ben Kraiem(2008),andSahutandGharbi(2008).

Debt=(totaldebt/totalassets) inpercentage

4.3.3.2. Size. AccordingtoHovakimianetal.(2004)andDufourand Molay(2010),thesizeofthefirmaffectsitsfinancialpolicy.Indeed, largercompanieshavehigherperformanceandaremoreinvest- mentinresearchanddevelopmentthansmallandmediumsized ones(Booth,Aivazian,Demirguc-Kunt,andMaksimovic,2001).The companysize,infact,iscalculatedbyseveralmethods;namely,the logtotalassets,theworkforceandturnover.AccordingtoBahagat andBlack(2001),DurnevandKim(2003),Andres,Azofra,andLópez (2005),andHerglietal.(2007),thesizeismeasuredasfollows:

“log(sales)”. Others, likeBrownand Caylor(2004), BenCheikh andZarai(2008),Bauer,Frijns,Otten,andTourani-Rad(2008),and Adjaoud,Zeghal,andAndaleeb(2007)usedthevalue“log(thetotal assets)”.

Weusedthe(Ln(CA))asasize-measurementinthisresearch.It isidentifiedbythelogarithmofthegroupturnover.Thissamemea- surementisusedinseveralstudiessuchasBujadiandRichardson (1997),BarkerandMueller(2002)andChenetal.(2008).

Size=Ln(CA)

4.3.3.3. Age. Thecompanyagehasaverysignificanteffectonper- formance.Itisexpressedbythelogarithmofthenumberofworking years(Brown&Caylor,2004;BenCheikh&Zarai,2008).

Age=Ln(numberofyears)

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Table2

Socialperformancefactors(22items).

Items Factor1motivation

ofemployees (35,665%

VE)

Factor2 loyalty,

encouragementand satisfactionofclients:

(35,379%

VE)

Factor3 relationwith community (13,16%

VE)

Factor4F4:relation withthecountry (10,934%

VE)

1-Weputchild-carecenters ,986

2-A3-month-high-productionbonusformostemployees ,986

3-Ensuretransportforemployees ,937

4-Ensuretrainingsformyemployees ,919

5-Ensurethemedicalcoverageforallmyemployees ,905

6-acanteenissetupinmybusiness ,847

7-theprovisionofaninfirmarywithadoctoravailable on-siteduringallwork-hours

,964

8-Theyhavetherighttostrike ,945

9-Providingqualityservice ,929

10-ensurethattheproductsoldisinlinewithwhathasbeen previouslynegotiated

,914

11-freedelivery ,876

12-ensureahighqualityofcommercialrelationsbetween thecustomerandthecompany’sinterlocutors

,982

13-ensurethatthesalesprocessisoptimalandeffective ,940

14-offertadditionnelProduct ,939

15-Minimizingwaitingtime ,934

16-Proliferationoftheproductsoffered ,985

17-Icontributetothefinancingoftheinfrastructureinmy area

,985

18-Iparticipateintheculturalactivitieswithinmybusiness ,907

19-Iassurethefundingofschoolsandmosquesinmycity ,862

20-Iparticipateinlocalassociations ,789

21-Isuggesttrainingsforemployeesofcompaniesin difficulty

,703 22-Ihelpsmallandnewbusinessestogetthemontheirfeet

intheTunisianmarket

,804

Source:thefactorsolutionbytheSPSS20software.

4.4. Questionnairevalidation

Ourobjective is totestthevalidity of22 itemsabout social performanceand6itemsaboutenvironmentalperformance.The internalconsistencyvaliditytestofourquestionnaireisachieved withGronbachalpha(ameasurementoftheinternalconsistency betweenthedifferentitemsofmeasurement(betweensocialper- formance,andenvironmentalperformance)equals(␣=0.623).

Theinternal consistencybetweenthe22 itemsofsocial per- formanceisveryimportant,it equals0,781.For the6itemsof environmentalperformance,itislessimportantasitequals0,350.

Thus,onecansaythatthescalegeneratedforthemeasurementof thevariousitemsisreliableandincludestheaspectsofthetheory.

ThePrincipalComponentAnalysissuggestsastructureof4factors representing95.138%ofthetotalvarianceforthefactorsofsocial performance.Forenvironmentalperformance,wehavethreefac- torsrepresenting73.838%ofthetotalvariance.Thus,theindexof Kaieser-Mayer-Olkin(KMO),whichreflectstheadequacyofthefac- torsolution,isveryimportantforthe3variables.Thefactorsolution ofsocialperformanceissummarizedinthefollowingtable:Table2 Table3.

4.5. Empiricalvalidationoftheresearchhypotheses

Wewilltrytoverifytheeffectofinnovationcompaniesonthe performanceofthefirms:

4.5.1. Descriptiveanalysis

Thispartis dedicated tothepresentation ofthe descriptive statisticsrelated to: theaveragefinancialperformance, innovationstrategy,socialperformance,environmentalperformance,the companysize,thecompanyageandthedebtsTable4.

4.5.2. Verificationoftheabsenceofmulticollinearitybetweenthe independentsvariables

Ourgoalistoverifytheabsenceofmulticollinearitybetweenthe explanatoryvariables,ourfirstcaseiswhenourdependentvariable isfinancialperformance,oursecondcaseisifY1isequaltosocial performanceandfinallywhenthevariableexplainedisequaltothe environmentalperformance:

AsthecorrelationmatrixofPearson(allcorrelationcoefficients arebelow0.7whichcorrespondstotherestrictedfromwhichit usuallybeginstohaveseriousmulticollinearityproblems.Inaddi- tion,fromTable5,Table6and Table7,wecanseethat allour explanatoryvariableshaveavalueofFIVwhichismuchlowerthan 2.Theseresultsallowustoconcludethatwedonothaveaserious problemofmulticollinearity.

4.5.3. Testsofspecification,heteroscedasticityand autocorrelation

Ourstudyfocusesonasampleof96Tunisiancompaniesexam- inedoverawholeyear.Thisleadstotheestimationoftimeseries ratherthanpaneldata.TheestimationisdonebyLeastSquared.

Inother words,wetested heteroscedasticitybyperformingthe Breusch-Pagantest.Inthecontextofaheteroscedasticitytest,the nullhypothesisishomoscedasticityanditwillbethecasewhenall thecoefficientsofregressionofthesquaredresiduesarezero.To performthistest,weregressedthesquaredresiduesresultingfrom thefixed-effectmodelwiththeexplanatoryvariablesofthediffer- entregressionequations.Accordingtothistest,thestatisticsFof Fisherisnotsignificantforallequations.Thisleadstotherejection ofthealternativehypothesisandtheacceptanceofthenullhypoth- esis(theyareallhomogeneousandwedonothaveaproblemof heteroscedasticity).

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Table3

Environmentalperformancefactors(6items).

Items Factor1:

EnvironnementProtection (28,821%VE)

Factor2:

Energysaving (28,148%VE)

Factor3:

recycling (16,869%VE) 1-Ichooseenergysourcesthatprotectthe

environment

,929

2-Ichooselow-costmeansoftransport ,928

3-Iapplythehigheststandardsof environmentalstandards

,919

4-Imakeanenergysavingplan ,916

5-Irecyclemyproducts ,899

6-Therawmaterialschosenbyourcompany limitthedepletionofnaturalresources

,446

Source:thefactorsolutionbytheSPSS20software.

Table4

Descriptiveanalysis.

Variables Minimum Maximum Moyenne Ecarttype

FP −,50 ,75 ,4534 ,19847

SP ,06 ,94 ,5145 ,23796

EP ,25 ,75 ,4658 ,17902

R&D ,09 ,99 ,5803 ,21715

AGE ,3 1,91 1,4920 ,31502

Size ,04 13,25 2,4545 1,68914

Debt ,02 1,00 ,4891 ,25370

R&D:researchanddevelopment;SP:socialperformance;FP:financialperformance;EP:environmentalperformance.

Source:analysesbyEviews7software.

Table5

Pearsoncorrelation(relationdiversification-FP).

Variables VIF FP R&D AGE Size Debt

FP 1

R&D 1,951 ,158^* 1

AGE 1,919 −,037 −,026 1

Size 1,017 −,046 ,070 ,687^** 1

Debt 1,016 −,058 ,006 −,055 −,123 1

*:signification5%

**:siginification1%

Table6

Pearsoncorrelation(relationR&D-SP).

variables VIF SP DIV AGE Size Debt

SP 1

R&D 1,871 ,059^* 1

AGE 1,979 −,267^** −,024 1

Size 1,457 −,329^** ,027 ,687^** 1

Debt 1,236 −,158 −,022 −,123 −,055 1

*:signification5%

**:siginification1%

Table7

Pearsoncorrelation(relationR&D-EP).

variables VIF EP R&D AGE Size Debt

EP 1

R&D 1,005 −,070^* 1

AGE 1,929 −,038 −,024 1

Size 1,906 −,068 ,027 ,687^** 1

Debt 1,018 −,132 −,022 −,123 −,055 1

*:signification5%

**:signification1%

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Table8

(LinearregressionofthreemodelswithMCGmethodbyEviews7).

Independentvariable Model1

Coefficients (t-statistic)

Model2 Coefficients (t-statistic)

Model3 Coefficients (t-statistic)

C 0,284015(3,741572)* 0,311337(4,082823)* 0,82480202(4,278129)*

R&D 0,089374(4,99298)* 0,069123(5,159616)* −0,309379(−4,020312)*

Size 0,005082(5,182704)* −0,007102(−3,25431)* 0,075289(3,065785)***

Age 0,084986(2,859785)* 0,008228(0,180365)* −0,113238(−2,97548)***

Debt −0,003042(−2,90905)* 0,000640(3,606567)* −0,000428(−3,76081)***

Rsquared 0,286119 0,17634 0,165134

Loglikelihood 29,72834 30,00778 59,10402

F-statistic 15,202487 17,403888 36,567616

Prob>F ,0000 ,0000 0,0000

Ownelaboration.

5. Resultsandinterpretation Themodelstobetestedare:

Model1:FP=␤₀+␤₁∗R&D+␤₂∗SIZE+␤₃∗AGE+␤₄∗DEBT+␧→H1 Model2:SP=␤₀+␤₁∗R&D+␤₂∗SIZE+␤₃∗AGE+␤₄∗DEBT+␧→H2 Model3:EP=␤0+␤1∗R&D+␤2∗SIZE+␤3∗AGE+␤4∗DEBT+␧→H3

TheresultsofthelinearregressionarepresentedinTable8:

TheregressionsimplythatR&Dhasapositiveandsignificant impactofabout10%onthefinancialperformanceofthecompany.

ThisconcurswiththestudiesofEricksonandJacobson(1992)who concludethattheR&Dofafirmispositivelyrelatedtofinancialper- formance.WhenBerronietal.(2005)studiedasampleofSpanish firms,theyfoundthattheeffectofasignificantlevelofinvestment inR&D(theamountishigherthantheannualaverageforthesector) ontheperformanceofthecompanyisnegativebutinsignificantif thecontrolblockholdersarebanks.

Thus,weassumethepositiveimpactoftheinnovationstrategy onthecorporatesocialperformance(H2).Ourstudyleadstosatis- factoryresultssincewefindapositiveandsignificantrelationship atabout5%and10%betweenresearchanddevelopmentandcus- tomers,researchanddevelopmentandemployees,andapositive significancebetweenresearchanddevelopmentandcommunity.

ThesameresultsarefoundbyOltraandSaintJean(2011)whoshow thattheintegrationofinnovationintervenesafterthecustomers’

request; similarly, theworkof Also, thework of Gallaudet al.

(2012)dealwiththerelationshipbetweeninnovation,employees andcommunity.Thus,innovationenablesthecompanytoachieve notonlyfinancialperformancebutalsosocialperformance.Inother words,thefirmcansatisfyandencourage,firstlyandessentially,its customers;then,itstrengthensitsrelationshipwiththeemploy- ees;eventually,itcanrealizearegionalsatisfactionsinceitwillhelp theregionbyfinancingtheinfrastructure.Whenwespeakabout therelationshipbetweeninnovationand environmentalperformance,thevalidationofourhypothesis(H3)isusedtoidentifythe existenceofarelationship(positiveornegative)betweenresearch anddevelopmentandenvironmentalperformance.

Ourresearch drivesustoconcludethat researchand development has a significantly negative effect of about 10% on environmentalperformance.ThismeansthattheTunisiancompa- niesdonottaketheenvironmentintoconsiderationduringtheir research.Theyseekonlytheirfinancialandsocial performance.

ThisresultisinaccordancewiththestudiesofOltra(2008)who believesthatthe effectof innovationonenvironmentalperfor- mancedoesnotrestonlyonresearchanddevelopment,butalsoon technology.Inthis,hemeansthattheexistenceofnewtechnologies woulddrivethefirmstoinnovateanddevelopnewenvironmental approaches.

Incontrast,ourresultsareinconsistentwiththestudiesofKemp etal.(1994)whostatethat“thetechniques,processandproducts

eliminateorreducetheemissionofpollutantsand/ortheuseof rawmaterials,naturalresourcesandenergy”.Whenwetalkabout thecontrolvariable,wenoticethatsizeisnotalwaysassignifi- cantasthevariablesofageandindebtedness.So,wecansaythat performanceisnotrelatedtothesizeofthecompanyand,espe- cially,thesocialandenvironmentalperformance.Forinstance,the Tunisianindebtedcompanieshaveapositivefinancial,socialand environmentalperformance.

6. Conclusion

Unlikemanymanagementtopicsinwhichwecanperceivea riseofpopularityandadeclineofinterest,theselectionandimple- mentationoftheperformanceindicatorshavebeenanincreasingly importantmatter inrecent years. In the1990’s,thecompanies soughttoimprovetheirperformancebyusingnewstrategies.The article,therefore,isaimedtoupdatethetheoreticalresearchdeal- ingwiththe relationshipbetweeninnovation and performance bystudyingasampleofTunisiancompanies.Thestatisticaltests clearlydenotetheexistenceofasignificantlypositiverelationship betweenresearch and development and financial performance.

Accordingly,thishelpsusdeducethattheTunisiancompanieshave toimprovetheirfinancialperformancethroughnewtechnologies andfreshideas.Theirvisionmustalsobegearedtoasoundrela- tionshipbetweeninnovationandtheircustomers,innovationand employeesandcommunities.Thus,theybuildastrongrelation- shipbetweeninnovationandtheirsocialperformance.Throughout thisstudy,wecouldcomeupwiththefactthatthereisaposi- tivelysignificantrelationshipbetweenthetwoconcepts:research anddevelopmentandsocialperformance.Whenwepointtoenvi- ronmentalperformance, wefindthatthis variableis negatively significant.Thismeansthatdespitethestrongandpositiverelation- shipbetweentheinnovationstrategyandthefinancialandsocial performance,theTunisiancompaniesturnablindeyetotheenvi- ronmentanditsexpectations;assuch,thereductionofdepleted naturalsources.

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