Article,

Internal Marketing, Innovation and Performance in Business Services Firms: The Role of Organizational Unlearning

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International Journal of Management, 29 (4): 403-429 (December 2012)

Abstract

Organizational unlearning and internal marketing have been recently postulated as key determinants for firm’s innovation activity. Internal marketing is also deemed a valuable instrument to overcome organizational resistance to change and favor unlearning processes. Accordingly, this research seeks to contribute to the scarce empirical evidence on these relationships by analyzing the influence of organizational unlearning and internal marketing on innovation as well as the mediatory effect of organizational unlearning in the internal marketing-innovation link. The study also assesses the influence of innovation on firms’ customer-related and organizational performance. The conceptual model is tested using structural equation modeling on a sample of knowledge intensive business services (KIBS). These firms represent one of the fastest growing areas of the European service economy in terms of employment generation and trade value. Results reveal that a higher level of organizational unlearning will improve the firm’s ability to innovate. It is also confirmed that the implementation of internal marketing has a positive effect on organizational unlearning although the direct effect of internal market on innovation is not substantiated. The study supports that the continuing development of innovation is especially important for KIBS’ competitiveness since innovation has a positive and direct effect on customer-related outcomes which ultimately improve business performance.

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