The effect of nonfinancial performance measures, absorptive capacity, and organizational learning on innovation performance

This study develops a conceptual model to examine the effect of nonfinancial performance measures on absorptive capacity, organizational learning, and innovation performance. We collected online survey data from 148 senior-level managers from US manufacturing firms and used the component-based structural equation modeling-partial least squares (SEM-PLS) statistical technique to evaluate our conceptual model’s psychometric properties and hypothesis testings. Our results show that nonfinancial performance measures are positively associated with absorptive capacity and organizational learning, as well as both absorptive capacity and organizational learning, are positively associated with a firm’s innovation performance. In addition, the relationship between nonfinancial performance measures and innovation performance is serially mediated by absorptive capacity and organizational learning. Our study adds to prior research by advocating absorptive capacity and organizational learning as two critical factors that affect the relationship between nonfinancial performance measures and innovation performance.