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Tag Archive innovation

The short-term impact of innovation on the market value

In order to study the relationship between innovation and market value the event study approach may be adopted. The approach accounts for the short-term innovations’ effects. The innovation may be represented by the innovation announcements – publicly available news concerning innovations.
Using innovation announcements to measure innovation effects on companies’ market value is a broadly accepted scientific approach. Chang, Wu and Wong [2010] stated: “standard event-study method was used to examine stock price responses to announcements of innovations” [2010, p. 158] in the context of family owned businesses. Lee, Kim and Kim [2012] used event study approach to examine open technology innovation activity announcements’ effects on Korean firms stock returns. Kajander et al. [2012] analysed sustainability innovation announcements in construction sector in order to measure their impact on companies’ market value. They applied event study approach. Ba et al. [2013] in their study on automakers utilised event study to assess market reaction (thus companies’ market value change) to green vehicle innovation. However similar studies in tourism have a scarce representation of just one research performed by Nicolau and Santa-Maria [2013] who verified innovation announcements effects on hotels’ market value. Still their findings must were tempered by some limitations.
The event-study method is used to measure financial effects of unanticipated events and it allows assessing whether there are abnormal stock price changes associated with them [McWilliams, Siegel 1997]. The calculation procedure was described by Szutowski and Bednarska performing the research on the Polish capital market [2014, p. 210-211]:

“Central to event study approach is calculating abnormal returns, which are assumed to reflect the stock market\’s reaction to new information arrival (McWilliams & Siegel, 1997). The abnormal return is the difference between the actual return and the expected return that would have occurred if the event had not taken place (…).
Expected returns were computed using market model, which assumes a linear relation between the security return and the market return (…).
The daily abnormal returns were aggregated over the event window and cumulative abnormal returns were calculated (…). Lastly, to obtain a single CAR for different innovation types and for the whole sample an average of all event-specific CARs was computed (…).
In order to verify the results’ statistical significance the J test was used (Szyszka, 2003). The test is based on standardised cumulative abnormal returns. In the present study the null hypothesis, that an event doesn’t influence stock prices, was tested (…). Statistical significance was tested for 0,05 and 0,1 α-values”.

Author: Dawid Szutowski



Chang, S., Wu, W., Wong, Y., 2010, Family Control and Stock Market Reactions to Innovation Announcements, British Journal of Management, vol. 21, pp. 152, 170.
Lee, H., Kim, S., Kim, J., 2012, Open technology innovation activity and firm value: evidence from Korean firms, Applied Economics, vol. 44, pp. 3551-3561.
Kajander, J., Sivunen, M., Vimpari, J., Pulkka, L., Junnila, S., 2012, Market value of sustainability business innovations in the construction sector, Building Research and Information, vol. 40, no. 6, pp. 665-678.
Ba, S., Lisic, L., Liu, Q., Stallaert, J., 2013, Stock Market Reaction to Green Vehicle Innovation Sulin, Production and Operations Management, vol. 22, no. 4, pp. 976-990.
Nicolau, J., Santa-Maria, M., 2013, The effect of innovation on hotel market value, International Journal of Hospitality Management, Issue 32, pp. 71-79.
McWilliams, A. & Siegel, D, 1997, Event Studies in Management Research: Theoretical and Empirical Issues, Academy of Management Journal, 40(3), pp. 626-657.
Szyszka, A., 2003, Efektywność giełdy papierów wartościowych w Warszawie na tle rynków dojrzałych, Wydawnictwo Akademii Ekonomicznej w Poznaniu, Poznań
Szutowski, D., Bednarska, A., M., 2014, Short-term effects of innovations on tourism enterprise market value – event study approach, [in:] Dias, F., Oliveira, S., Kosmaczewska, J., Pere, A. (eds.), New trends in tourism research: A Polish perspective, Tourism Research Group of Polytechnic Institute of Leiria, Peniche, pp. 205-217.

Innovation according to Nobel Prize laureates

Simon Kuznets, awarded in 1971 by the Prize in Economic Science (today: The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel), contributed to the knowledge of innovation [Nobelprize.org 2014]. In his general approach to innovation, Kuznets recalls Schumpeter, and defines innovation as “material changes in the production function” [Kuznets 1954]. The author claims innovation to have “strategic importance in the evolution of capitalist economy” [Kuznets 1954]. Yet, in the later works Kuznets introduces the notion of epochal innovation and analyses the economic growth of nations through epochs. He states that each epoch starts with a major unique innovation [Kuznets 1966], which spreads to a substantial part of the world and constitutes a dominant source of sustained growth.

Jean Tirole received the The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel in 2014. The author focused on the competitive positioning. In “The theory of industrial organisation” [1995] he indicates that the firms innovate either to avoid loosing market share (reactive approach), or to gain strategic market position (proactive approach). At the same time author indicates that product innovation allows the creation of new products, and that process innovation changes the technological possibilities of production.

Author: Dawid Szutowski



Kuznets, S., 1954, Economic change, William Heinemann ltd, Melbourne-London-Toronto.
Kuznets, S., 1966, Modern Economic Growth. Rate, Structure, and Spread, Yale University Press, New Haven-London.
Nobelprize.org, 2014, Simon Kuznets – Facts, http://www.nobelprize.org (1.3.2015)
Tirole, J., 1995, The theory of industrial organisation, MIT Press.

The Bonjour!


Writing – a simple medium of communication – is as natural for the contemporary individuals, as breathing. However, can we name the ones who invented it? Were they the Mesopotamians seeking for an information-transmitting tool, effective in their expanding world [Kramer 1963, p. 302]? Were they the Chinese giving rise in 1200BC to the contemporary Chinese language with the use of oracle-bone inscriptions [Boltz 1999, p. 75]? Were they the Americans marking the famous stone block in the today Veracruz state, Mexico [Briggs 2006]? Confusing…

Are there any such dilemmas in tourism? The passport was first issued on the regulated and formal basis in 1414 in England at the time of King Henry V [Hjalager 2015, p. 6]. However, was it really such a novelty? Let’s consider the medieval Islamic Caliphate, which in order to ensure that taxes are not evaded introduced bara (receipt for taxes paid). Only with this document a travel to different regions was possible [Stillman 1992, p. 6]. Sounds familiar?

Both, writing and passport (and many other things!) were invented several times throughout history. The re-invention of the already invented things is an obvious waist of time and resources. The principle applies as much to the breakthrough discoveries, as to the humble advances in the research! The ancient communities didn’t have any of the communication tools disposable today and thus the time and space differences were insurmountable. However, nowadays all sorts of information and communication technologies invite us to share the processed advances in our researches and make our tiny contribution to the incredible world of science. Even more – to share the results is not a possibility, but a necessity.

There is no need to re-invent writing.

Author: Dawid Szutowski



Briggs, H., 2006, “Oldest” New World writing found, BBC News. Retrieved from: http:news.bbc.co.uk (31.3.2015)

Preliminary research 3

The research aimed at creating innovations’ classification designed for tourism companies. To reach the objective, systematic literature review based on SALSA method and meta-synthesis approach were used. Seventeen articles from three groups extracted in classification procedure were analysed. Author’s multidimensional classification including innovation’s type and the degree of novelty involved was proposed. It took a graphic form with a descriptive component.


The research contributes both to the research and to the world of practice. First, by joining the current scientific discussion about innovations, which is not transmitted with equal intensity into tourism. Second, by delivering a framework for analysing innovations in tourism companies.

The research was limited to leading tourism, hospitality and sport journals. The time frame was set as January 2000 – May 2014. No books and conference proceedings were included. Further investigations could include different kinds of publications and expand the time frame. Also what seems beneficial for further investigations is the analysis of specialised classifications and creation of appropriate classification for the whole service sector and low-tech companies.

Author: Dawid Szutowski

The research was published in:

Szutowski D., 2014, Classification of Innovations in Tourism Companies – systematic literature review, [in:] Kruczek Z., Banasiak W. (eds.), Dynamika przemian rynku turystycznego, Wydawnictwo Wyższej Szkoły Turystyki i Języków Obcych, Warsaw, pp. 37-43.

Preliminary research 2

The purpose of the research was to explore the relationship between financial effects of innovation, stock price changes and theoretically related variables. The research was conducted in three countries – Poland, Italy and Sweden. It concentrated on listed tourism enterprises and relied on event-study method. The data was analysed using the regression model. All the necessary evidence concerning innovation was gathered through ProQuest database, and the information on the tourism companies’ market value through stock exchanges’ databases.

Basing on the literature studies a set of eight variables differentiating the relatio§n between innovation and market value was determined. The research revealed that organisational innovation generates stronger impact on the market value than product one. Also it revealed that innovation signalled by a single announcement generates higher increase in market value than the one communicated through a series of releases.

The limitations included the limited spacial scope. Also, it was not possible to verify the significance of two variables due to the insufficient number of observations. Increasing the geographical differenciation and expanding the sample seem beneficial for further research. The proposed model posses a practical applicability. It could support tourism companies’ managers in planning innovation policies. The paper attempts to fulfil the research gap concerning the relation between innovation and the market value of tourism enterprises. The introduced model constitutes the main novelty.

Author: Dawid Szutowski


Szutowski, D., 2015, The model approach towards measuring the impact of innovation on tourism enterprises’ market value, Research Papers of Wrocław University of Economics, no. 379, pp. 460-467.

The research gap

Kotler and Trias indicate a major problem in the management of innovation – the lack of complex, unified, and widely accepted theory. Such situation has serious practical implications. The authors compare innovation management to marketing and finance, and deliver the results of Business Week survey . Most managers recognize, and use marketing tools such as market segmentation, brand positioning, 4P, etc. Also, each manager recognizes and uses the financial tools such as cash-flows analysis, analysis of costs and profits, etc. However, almost a half of managers do not recognize any tool of innovation, or creativity policies. There is no consensus on what model should be used in innovation management, and where to allocate the responsibility. In the result, most companies are condemned to loosing control on their innovativeness.

The gap in tourism

Hjalager indicates “that there is still only limited systematic and comparable empirical evidence of the level of innovative activities and their impacts and wider implications for destinations and national economies. An agenda for future research is emerging, suggesting that there is quest for both formal quantification and for qualitative studies of the foundations, processes, implications and policies of innovation in tourism” [Hjalager 2010, p. 1].

Author: Dawid Szutowski



Hjalager, A., 2010, A review of innovation management in tourism, Tourism Management, 31, pp. 1-12.

Trias, F., Kotler, Ph., 2011, Winning at innovation. The A-to-F model, Palgrave Macmillan, Hampshire.