Organizational Complementarity in the Innovation Process. Evidence from Luxembourg firms.

The aim of this paper is to investigate the complementarity of different organizational practices in the innovation process. For this purpose, we perform a two-steps analysis: first, analyzing the conditional correlation between practices and second, directly testing the impact of simultaneous combinations of practices on the firm's innovativeness. We use the firm-level dataset drawn from the Luxembourgish Community Innovation Survey (CIS2006) carried out in 2008. The survey provides information on four organizational practices: ?business practices?, ?knowledge management?, ?workplace organization? and ?external relations?. Two phases of the innovation process are investigated: the decision to innovate or not, and the innovative performance, conditional that a firm does any innovation at all. The results show that the implementation of new ?knowledge management? systems has a significant and positive impact both on the propensity to innovate and the innovative performance. The joint implementation of ?workplace organization? and ?external relations? raises the firm innovativeness. Furthermore, ?workplace organization? and ?external relation? are complementary. The results also provide some suggestive support that ?business practices? might have a beneficial role on firm innovativeness only if it is simultaneously used with other organizational practices. Overall, the paper shows that the evidence of complementarity in practices of organizational innovation depends on the phase of innovation process as well as the particular pair-wise combination of organizational practices.