INNOVATION STRATEGY : IT , R & D AND PROFITABILITY

Studies have been performed concerning the individual success of R&D intensity, Information Technology (IT) usage or the effects of innovation over time. Each separate analysis has shown to varying degrees why each of these strategic areas is important. This paper investigates the association between IT, R&D, innovation and profitability. A sample of 36 firms in the consumer goods industry was chosen to test inter-relationships among the above variables. Paired t-tests and non-parametric equivalents were the statistical analyses used to test the hypotheses. It was found that R&D intensity was greater for smaller firms while IT innovation was stronger in larger companies. Further, statistical results reveal that the two separate strategies of deploying high R&D intensity or investing heavily in IT innovation both yield similar profitability results. An interesting observation was that even though no firm pursued both strategies at high levels, profitability was not harmed, i.e. intensive pursuit of one of these strategies was sufficient for profitability.