Innovation and performance in the service industry: empirical evidence from South Korea

The purpose of this study is to empirically investigate the effect of innovation activities on the corporate performance of service firms examining how size influences their performance. We used quantile regression to estimate the correlation between firm innovation activities and performance in the service industry and determined whether firm size matters for innovation using the survey on innovation and structural change of the service industry (SISCS). Among various innovation activities, only organisational innovation was significantly correlated with increased sales for service firms. Moreover, the effect of organisational innovation was larger for smaller service firms, suggesting a negative relationship between corporate size and organisational innovation. Therefore, organisational innovation may be the key factor for small service firms to improve their performance.