This article analyzes the relationship between the usage of Internet-based technologies, different types of innovation, and performance at the firm level. Data for the empirical investigation originates from a sample of 7302 European enterprises. The empirical results show that Internet-based technologies were an important enabler of innovation in the year 2003. It was found that all studied types of innovation, including Internet-enabled and non-Internet-enabled product or process innovations, are positively associated with turnover and employment growth. Firms that rely on Internet-enabled innovations are at least as likely to grow as firms that rely on non-Internet-enabled innovations. Finally, it was found that innovative activity is not necessarily associated with higher profitability. Possible reasons for this and implications are discussed.

The relationship between technology, innovation, and firm performance—Empirical evidence from e-business in Europe