© Media Watch 10 (3) 614-627, 2019
ISSN 0976-0911 E-ISSN 2249-8818
DOI: 10.15655/mw/2019/v10i3/49679
Analyzing
Relationship between Innovation Strategies and
Performance of Newspaper
Firms in North and Central India
Shailja Khanduri
Doon Business School, India
Globally, very distinct circumstances are faced by newspaper firms in
different countries. While newspaper firms in developed countries are facing
the downtrend, there is a sustained robust growth seen in India. This study
seeks to determine if a relationship exists between Indian newspaper firms
healthy performance vis-à-vis various innovation strategies employed, as innovation strategies are
supposed to be a positive influence in today’s economy. The innovation
strategies analyzed here are product innovation, marketing innovation, and
societal marketing innovation. The firm’s performance is measured by market and
financial performance. The study outcome identifies the positive relationship
between various innovation strategies and newspaper firm’s market and financial
performance. Additionally, the best regression model is also
given for the association between innovation strategies and firm’s performance.
The conclusions of this study may be significant for the
survival of the newsprint media market when a global slowdown is happening in
newspaper firms of developed countries.
Keywords: Financial performance, marketing innovation, market
performance, newspaper firms, product innovation, societal marketing
Every day, more than half of the grown-up population
globally (i.e., about 2.7 billion adults) read a daily newspaper. The newspaper
industry generates more than $ 153 billion of revenue globally from content
sales, advertising revenues, and increasingly supplementary form of diversified
revenue streams (WAN IFRA, 2017). At present, the global
newsprint media industry is confronted with many challenges posed by the
socio-economic scenario, wider consumers’ choice, changing preferences, as well
as the advent of electronic media
(cable TV news) and internet news websites.
In developed economies, print newspapers are losing their
importance as the primary source of news, and their declining revenues are
causing numerous layoffs and difficulties for newspaper firms to stay
competitive. To compensate for this revenue loss, the global newspaper industry
is moving towards product innovation by digitization, and the response is also
good among the end users, as digital
advertising grew by 5 percent from 2015 to 2016. However, print advertising
revenue has declined by 8 percent worldwide over the previous period and down
by 26.8 percent over the past five years. Total revenues of global newspapers
(including print and digital) are down 2.1 percent in 2016 from a year earlier
and are depressed 7.8 percent over the last five years (overall revenue
decreased from USD 160 billion in 2014 to USD 153 billion in 2016) (WAN
IFRA, 2017).
Despite global downswing, the newspaper industry in India has been
successful and maintained its advancement with increased circulation and
readership. With more than 337 million copies sold every day, India is
the largest newspaper market in the world (WAN IFRA, 2017). This is almost twice the circulation in China and about eight times more
than in the USA. There is 71.51% increase in newspaper circulation numbers for
India (highest for any country) from 2012 to 2016, while in the same period;
USA newsprint media market reported a negative growth of 10.70 percent. With
the exception of few countries; Portugal (in Europe), India, China, Indonesia,
Malaysia, Thailand (all in Asia) and Chile and Mexico (in South America), most
countries show a negative growth in circulation number, during the period of
2012 to 2016 (WAN IFRA, 2017).
A
note of caution though; for the first time in Indian readership survey (IRS-2017
MRUC, 2018), ‘no English language daily featured
among India’s ten most read dailies.’ While a Hindi newspaper (Dainik
Jagran) topped the IRS-2017 list with more than 70 million dailies circulation
per day, the top English newspaper (The Times of India) claimed a distant 11th
rank, with 13 million copies sold per day. A total of 6 Hindi newspapers and four
regional language newspapers have more daily circulation than most read English
language newspaper. The English newspaper in India showed only a 10% increase
in subscription during last four years (total circulation of 28 million in
2017), while the Hindi language dailies showed a huge 45% rise in its numbers
(total circulation of 176 million in 2017). This should be worrying for
newsprint media in India as an English newspaper in India are subscribed by the
affluent society, and a smaller proportion of growth for English dailies may be
telling a bitter truth; the educated and affluent Indians are switching to some
other source of news media (TV cable news, news websites or social media). It
may be suggesting a trend that as the smartphone and internet availability
gains momentum, more and more people may switch towards another medium in place
of newsprint media.
Nonetheless, the most important aspect of newsprint
media in a democracy like India, where almost 39% of Indians read newspaper (IRS-2017
MRUC, 2018),is the association between the principled journalism and successful
democracy, where free and fair journalism makes sure that its role
of impartial arbiter
would ward off the motivated onslaught of data mining companies and social
media platforms during election times. A specific case study could be the 2016
elections in a mature democracy like the USA and the influence of hired data
mining companies and compromised social media sites (Lewis & Hilder,
2018; Gopalkrishnan, 2018). If the Indian newsprint media goes into decline
like in the developed world, it may face the heat of cost-cutting. This could
lead to leaner journalism in the future – and perhaps
less ethical and principled workforce, whose sole objective would be achieving
the commercial targets. This could hurt the Indian democracy, with biased,
motivated, compromised, confusing, and misleading narrative propagated in the
general public. Saving the newsprint media in India is therefore very much
significant for saving Indian democracy. Still,
the pertinent question here arises what different philosophy does newsprint
media in India is following so that it can increase circulation, unlike developed
countries. The increase in the
distribution of newspaper dailies in India can be attributed to numerous facts,
few of which are given below.
(i) The faster
rise in the overall population of India vis-à-vis developed nations, which is
creating an ever-growing market for every successful business commodity, as Indian
population grew at the rate of 1.26% during 2010-2015, while USA population
increased at a rate of 0.75% in the same period (Population Growth Rate, 2018).
(ii) The increase
in literacy level and better living standards in the general population of
India, after globalization in 1990’s era. A new study has found out that the Indian middle class doubled in size over eight years,
from 300 million in 2004 to 600 million in 2012 (Karnik, 2016). A developing
nation with a healthy GDP growth like India is expected to show a strong rise
in newspaper circulation, for example, China (28.21% rise in newspaper
circulation during period of 2012-2016)(WAN IFRA, 2017).
(iii) A
vibrant democracy like India also has a positive effect on newspaper
circulation as people want to be more aware of the current political tendencies
and government policies.
(iv) Another
important reason for newsprint media healthy growth in India could be ascribed
to still unsaturated newspaper circulation and internet reach. The newspaper
circulation in the USA has almost complete reach since last many decades, but
the same is not true for India. Furthermore, in India, the population of adult
internet users is only 41% in 2016, while almost 92% of the adult population in
the USA uses the internet. The higher internet reach provides the option of
surfing the news websites and hence print news media is showing a decline in the
USA, whereas most of the Indian populace is still dependent on print media for
news (WAN IFRA, 2017).
(v) Newsprint
media in India still has the advantages of ease of access, availability at
home, competitive pricing, being part of daily routine, original reporting,
professional editing and packaging, customized sections and pull outs over
digital media.
(vi) Newsprint
media has the power of written words over the cable TV news and digital news
platforms. A recent survey by authors among middle-class, educated, adult
Indians have shown that 55% respondents trust newsprint media, 29% trust cable
TV news, 11% trust news websites and only 5% population trust social media
sites for accurate and reliable news. Henceforth, the dynamics of fake news
dissemination in online communities is a vastly debated contemporary topic in
India and all over the world (Berduygina et al., 2019; Bharali & Goswami,
2018; Farooq, 2018; Shafi & Ravikumar, 2018).
(vii) An
increase in Indian newspaper industry may also be attributed to the fact that
print media in India has always been creative, knowledgeable helpful and always
been appealing to the readers through a range of innovative marketing and
selling tactics (Kukreti & Sharma, 2016). According to the world news media outlook 2017
report-innovation research group, the greatest risk to a newspaper company’s
future success is a reluctance to innovate, (WPT, 2017). This survey among newspaper firm’s
employees confirms the positive perception of innovation in the domain of the newspaper
industry. Assessing the relationship of innovation strategies with the
newsprint media firm’s market and financial performance is the topic of the present
study.
There is an adage that any economy will be dilapidated
if it produces no managerial innovations. Management expert Peter Drucker
(1985) has stated that ‘if an established organization, which in this age
necessitating innovation, is not able to innovate, it faces decline and
extinction.’ The corporate firms watch the changing
taste and inclinations of the people closely to take benefit before a competitor
and leverage it in the market as the source of competitive advantages to meet
its objectives(Barney, 2000). Numerous
economists and marketing researchers have tried to comprehend motivations
behind innovation strategies (Aghion et al., 2005; Arrow, 1962; Gilbert, 2006;
Nickell, 1996; Scherer, 1967; Schumpeter, 1942). Further, it is broadly agreed
that market orientation and innovation strategies can lead to increased
organizational performance (Narver & Slater, 1990; Jaworski & Kohli,
1993).
The role of innovation is more
vital for a firm operating in an oligopolistic market, such as newsprint media
market. Newspaper firms in
India have adopted strong market orientation and innovation practices (Khanduri
& Sharma, 2013). Nevertheless, despite the growing interest in
innovation strategies, no systematic research to date has examined its role and
impact in the newspaper industry in India. This paper seeks to determine if a
relationship exists between a firm’s performance vis-à-vis innovation strategies
developed by Indian newspaper firms. More specifically, the study proposes to test the relationship (if any) between
marketing innovation strategies (product innovation, marketing innovation,
and societal marketing ), and market and financial performance
(market share –advertising, market share– readers, customer retention, attracting
new customers, building a positive, newspaper image, sales growth & profit).
The Indian newsprint media sector, with 1, 18,239 registered publications
(17,573 in newspaper category) as on 31 March 2018 (RNI, 2019), is particularly
worthy of study, as it has a large fiscal impact on the economy of India. But
more important than the economic aspect, the newsprint media also has very
significant socio-political aspects in setting the narratives and general
public perception in India, which makes it a very important part of the fourth
pillar of the Indian state.
The
study is based on primary data that is collected from the newsprint media firm’s
senior-level marketing managers through questionnaires administered personally
as well as electronically. The statistical analysis software program used in the
present study is SPSS (IBM SPSS). The sample was randomly selected from the
newspaper firms operating in the north and central India. We have collected the data using survey
questionnaires. A total of 211 questionnaires were distributed, and 31
responses were received over six months. The basic constructs and measures are
adopted from existing and well-established scales within the literature (given
in Table 4). Multiple scales were available, so we compared and evaluated them
for deciding the most appropriate measurement for a construct, in the newsprint
media field. A pilot survey was done with the help of
an exhaustive questionnaire. It was conducted among nine non-sample
key-informants, who had sufficient knowledge and experience in the newspaper
media industry. The surveyed included marketing managers of newsprint media,
marketing head of FM channel (owned by newspaper firm), senior newsprint media editors,
and owner of key advertising firms associated with newspapers. The exercise was
carried out to build a compact questionnaire and to validate the items used for
each construct which would lessen the response bias and measurement slip-up in
the sample (Kumar et al., 1993). We found a satisfactory response from the
field and then restructured our questionnaires for each construct. After this, we conducted the actual survey by personal
delivery and questionnaire posting by emails to marketing heads of various
newsprint media firms in the north and central India, and their responses were
acquired by personal interviews, telecalling and electronic mails.
The questionnaire is divided into three
sections, A, B, and C. The first Section-A contains questions on the newspaper
firm’s basic information. The second Section-B, contains questions on the objectives
of the research study. It contains questions on product innovation, marketing innovations, and societal marketing practices strategy
parameters. Section-C contains questions on the performance of newspaper firms
(dependent variable) in two different segments; market performance and
financial performance. The financial performance includes two items regarding
sales growth (circulation) and profit (net income). The market performance is
evaluated by questions on market share – reader, market share – advertising,
customer retention, attracting new customers, and building a positive newspaper
image.
Product innovation:
Product innovation constitutes of the introduction of
a good or facility that is entirely novel or considerably enhanced concerning
its features or envisioned uses; including noteworthy enhancements in technical
and procedural specifications, integrated software, modules and constituents, customer
ease of handling or other functional characteristics (OECD OSLO Manual, 2005). In the
newspaper industry, various product innovations such as the use of 3D
technology, product bands attached to the newspaper, half-tabloid publications
for commuters, perfumed newspaper, etc. are regularly adopted. Our
questionnaire responses were measured on a 5-point Likert-scale. The original questionnaire
consisted of 6 questions which were reduced to final four questions after Cronbach’s
alpha test (alpha = 0.723) to increase the reliability, as shown in Table 1.
Table 1. Product innovations
construct
Our newspaper firm introduces several
significant changes to the design and presentation of the newspaper every
year. |
Our
newspaper firm launches numbers of new newspaper supplements every year |
With NPD (new product development), our
newspaper firm explores/enters new markets segments. |
Our newspaper firm has employed a
significant number of people dealing with innovations in newspaper presentation. |
Marketing
innovation: Marketing innovation constitutes of employment of a novel
promotion method involving noteworthy alterations in merchandise design or
packaging, product advertising, product valuing, and placement of produce.
Market innovation plays a crucial role in achieving market requirements and positively
responding to market prospects (OECD OSLO Manual, 2005). The newsprint media employs various marketing innovations like offering
discounts, giving vouchers, printing large display ads inside newspapers,
setting up display booths and hoardings at high-traffic areas, incentives on
subscriptions, organizing events, contests or cultural nights, etc. Our questionnaire
responses were measured on a 5-point Likert-scale. The original questionnaire
consisted of 4 questions which were reduced to the final three questions after Cronbach’s
alpha test (alpha = 0.812) to increase the reliability, as shown in Table 2.
Table 2. Marketing innovations
construct
Our newspaper firm employs a significant
number of people to cater to the latent needs of the current customers and
potential customers |
Our
newspaper firm employs innovative methods to attract new and, potential
customers /readers |
Our newspaper firm stands first in the
market to introduce new promotion and advertising tools. |
Societal marketing
innovations: The societal marketing idea comprises of firm’s task to
decide the requirements, desires, and interests of an objective market and to supply
the anticipated goods more meritoriously and professionally than other players
in a way that conserves or improves the customer’s and the society’s welfare (OECD OSLO Manual, 2005). The societal marketing notion hosts business’s
community accountability into marketing practices (Kotler & Keller, 2012). The
societal marketing concept is very well adopted by newspaper firms in India. Various
campaigns are conducted by newspaper firms all-around the year, on the concepts
of green initiatives, cleanliness, women education, eye-donation, saving
rivers, student achievers, promoting art
and artists, save electricity, save water, No TV day, against air pollution,
against noise pollution, campaign against female foeticide, etc. to name a few.
Our questionnaire responses were measured on a 5-point Likert-scale. The original
questionnaire consisted of 5 questions which were reduced to the final four
questions after Cronbach’s alpha test (alpha = 0.859) to increase the
reliability, as shown in Table 3.
Table 3. Societal marketing
innovations construct
Our newspaper firm actively conducts
social awareness campaigns every six months |
Our firm spends considerable money on
public relations |
Our firm donates money to charity |
Our
firm actively invests resources and money in activities outside its business
which aim to benefit the community |
The majority of newspapers are privately
held companies and do not report their financial statements. Thus,
self-reporting is the only way to get hold of financial performance. Nevertheless,
subjective measures like self-reporting and judgemental assessment are
demonstrated to be consistent with objective measures of the market and
financial performances (Dess &Robinson, 1984; Jaworski & Kohli, 1993; Piacentini
et al., 2000; Weezel, 2009). A 7-point Likert-scale is used for each response
in a firm’s performance study. Considering the two different types of
performance (market and financial) allow for a more comprehensive analysis of
the results (Dess & Robinson, 1984).
The operating period considered in this
study of the newspaper firms is three years (i.e., 2014 – 2017), as economic
cycles have an impact on the performance of media firms (Venkatraman &
Ramanujam, 1986). Table 4 summarizes the
number of a distinct group of items used in the study, the actual number of
question items in the various constructs, literature source of constructs and
the Likert’s scale type used in the questionnaire design.
Table 4.
Measurement Items and Sources
Group of items |
Items |
Source |
Scale type |
Innovation Strategies Product Innovation Marketing Innovation Societal Marketing |
11 4 3 4 |
Dess & Robinson ,1984; Fazhoglu et al., 2016;
Fiol, 1991; Jaworski & Kohli, 1993; Kaiser, 1974; Karlsson&Tavassoli,
2015; Kocak et al., 2017; Narver &
Slater, 1990; Ramanujam & Venkatraman, 1984; Saif, 2015; Tuan et al, 2016; Wu, 2003; |
1 = strongly disagree, 5 = strongly agree |
Financial-based performance measures |
2 |
1 =much worse 7=much better |
|
Market-based performance measures |
5 |
1 =much worse 7=much better |
After Cronbach’s alpha test, we conducted
the principal components analysis (PCA) on various constructs to reduce the
dimension and get the principal components (or factors) representing the
construct (Picard, 2002). For
product innovation construct, one factor is extracted, so we retained the name
for the factor. Although the Kaiser-Meyer-Olkin (KMO) test value of 0.575 is
miserable for sampling adequacy, Bartlett’s test of sphericity (BTS) gave a
significance value of 0.000 (less than 0.05). Kaiser criterion is fulfilled by
just 1 factor with an eigen-value of 2.263, and the total variance explained by
the extracted factor is 56.584% (Cemy & Kaiser, 1977; Costello &
Osbome, 2005). For marketing innovation construct, the Kaiser criterion is
fulfilled by just 1 factor with an Eigen-value of 2.213 and the total variance
explained by the extracted factor is 73.756. The KMO test value of 0.591 is
miserable for sampling adequacy, but the BTS gave a significance value of
0.000. For societal marketing innovation construct, KMO test value of 0.812 is
meritorious for sampling adequacy, and the BTS gave a significance value of
0.000. Kaiser criterion is fulfilled by 1 factor with an Eigen-value of 2.859,
and the total variance explained by the extracted factor is 71.472 percent.
For market performance construct, KMO test
value of 0.689 is mediocre for sampling adequacy, and the BTS gave a
significance value of 0.000. Kaiser criterion is fulfilled by 1 factor with Eigen-value
of 3.556, and the total variance explained by the extracted factor is 71.126%. For
financial performance construct, KMO test value of 0.500 is miserable for
sampling adequacy, but the BTS gave a significance value of 0.000. Kaiser
criterion is fulfilled by just 1 factor with Eigen-value of 1.788, and the
total variance explained by the extracted factor is 89.421%.
Although
there are various reported results available on innovation strategies positive
influence on firm’s performance in various industries (Table 4), however the
findings from existing studies differ in many
respects which suggests that there is the need
for further research. Further, there is no literature
available concerning the effect of innovation strategies on firms’ performance
for the newspaper industry in India, which necessitates a rigorous analysis for
the same and is motivation for present work.
A cross-sectional multiple regression study
is performed on the dependent variables (MP= Market performance and FP=
Financial performance), where the independent variables are various innovation
strategies undertaken by newspaper firms (PI= Product Innovation, Market
Innovation= MI, and Societal innovation=SI).
Four-variable multiple regression model is
specified for both the dependent variables in this study. Under the purpose of
this study, to find out the relationship between various innovations strategies
on firms’ performance, we have stated two hypotheses. The first regression null hypothesis articulates
that there is no statistically significant relationship between the various
innovation strategy acquired by the newspaper firms and newspaper firms’ market
performance.
Null Hypothesis H0a: Innovation
strategies (PI= Product Innovation, Market Innovation= MI, and
societal innovation= SI) are not related to firms’ market performance.
Where MP
= b0 + b1 ´PI + b2 ´MI + b3´SI + e1 (1)
Such that H0a :b1 = b2 = b3 = 0.
Alternate Hypothesis H1a: Innovation strategies are associated with firm’s market performance. H1a:
b1 ¹ 0 or b2 ¹ 0 or b3¹ 0.
The second null hypothesis states there is no statistically significant
relationship between the various innovation strategy acquired by the newspaper
firms and newspaper firms’ financial performance.
Null hypothesis H0b: Innovation strategies (PI= Product
Innovation, Market Innovation= MI,
and Societal innovation = SI) are not related to firms’ financial
performance.
Where FP
= b′0
+ b′1
´PI + b′2 ´MI + b′3´SI + e2 (2)
Such that H0b: b′1 =
b′2 =
b′3
= 0
Alternate hypothesis H1b: Innovation strategies are associated with firm’s financial performance. H1b:
b′1 ¹ 0 or b′2 ¹ 0 or b′3¹ 0.
We
have regressed the dependent variable of market performance (of newspaper firms
in our response sample) on three independent variables constituting innovation
strategies (product innovation, marketing innovation, and societal marketing).
To check the issue of multicollinearity, we have calculated the variance
inflation factor (VIF), as given in Table5. The VIF values calculated are less
than 3, and the tolerance value is greater than 0.3 for all three independent
variables used in the model. So we can safely assume that our model does not
suffer from the issue of multicollinearity.
Table 5. Summarized
results for multi-collinearity analysis
Test for Multicollinearity:
Coefficients |
||
Model |
Collinearity statistics |
|
Tolerance |
Variance Inflation Factor (VIF) |
|
Product innovation |
.752 |
1.330 |
Marketing innovation |
.374 |
2.674 |
Societal innovation |
.439 |
2.280 |
Dependent Variable: Market
Performance |
Another important issue that
could come up with cross-sectional data used in this study is of
heteroscedasticity. Table 6 gives the results from heteroscedasticity
analysis using Breusch-Pagan and Koenker test statistics. The test uses the null hypothesis of “no heteroscedasticity
in errors.” Therefore, if the significance value is less than 0.05, we have
sufficient evidence to reject the null hypothesis. In case of financial performance, the Koenker and
Breusch-Pagan tests significance value are more than 0.05, so we do not have
sufficient evidence to reject the null hypothesis and can safely assume that
the present model does not have heteroscedasticity. However, a sign-value of
0.039 for Koenker test (for small sample size) in case of market performance shows the heteroscedasticity, even though the
Breush-Pagan sig-value is 0.232.
Table 6. Heteroscedasticity analysis using
Breusch-Pagan and Koenker test statistics for innovation and performance
variables
Heteroscedasticity
analysis for market performance |
||
Breush-Pagan and
Koenker test statistics
and significance-value |
||
|
Lagrange multiplier |
Sig |
BP |
4.285 |
0.232 |
Koenker |
8.369 |
0.039 |
Heteroscedasticity analysis for financial performance |
||
Breush-Pagan and
Koenker test
statistics and significance-value |
||
|
Lagrange multiplier |
Sig |
BP |
3.643 |
0.303 |
Koenker |
4.915 |
0.178 |
Multiple regression analysis is then
performed in SPSS and the vital test statistics for market performance
regression is summarized in table 7 for null hypothesis H0a. The F statistics of 11.793 (p-value = 0.000)
indicates that the regression, as a whole, is statistically significant. The
coefficient of determination (adjusted R2) suggests that about 51.9%
of the variation in market performance is explained by the three explanatory
variables, combined. The prediction model is specified as follows:
MP= 0.00 +
(0.540 ´PI) +
(0.288 ´MI) +
(0.123 ´SI) (3)
Where
b20 = 0.00,
b1 = 0.540,
b2 =0.288
and b3= 0.123.
Table
7. Summary of Regression for Innovation Strategies and Market Performance.
Regression Results for Market Performance |
||||
Adjusted
R-squared |
F-value |
Sig. |
||
0.519 |
11.793 |
0.000 |
||
Standardized
Coefficient (Beta) |
t-Stat |
Sig. |
||
Intercept |
|
0.000 |
1.000 |
|
PI |
.540 |
3.698 |
0.001 |
|
MI |
.288 |
1.390 |
0.176 |
|
SI |
.123 |
0.643 |
0.526 |
|
As the standardized beta coefficients for
the three independent variables are non-zero and the p-value = 0.000 for F statistics, we have enough evidence to reject
the null hypothesis H0a
and may conclude that there is a statistically
significant relationship between innovation strategies and newspaper firms
market performance. However, the test of significance for independent variables
(measured by the t statistics) shows that only product innovation (PI)
is statistically significant, while marketing innovation (MI) and
societal marketing innovations (SI) are not significant, for market
performance regression. It may be pertinent to mention that the correlation
coefficient between MI and SI is found to be quite high (0.7099). However,
we cannot infer the lack of statistical significance for MI and SI to
multicollinearity, as multicollinearity does not seem to exist in our analysis.
In other words, only product innovation
contributes meaningful information in the prediction of a newspaper firm’s
market performance. The sign of the standardized beta coefficient for all three
independent variables is consistent with prior expectation. Taking a standardized
beta coefficient for PI as an example, it suggests that with every
increase of one standard deviation in product innovation, the newspaper firm’s
market performance rises by about 0.54standard deviations.
Similarly, multiple regression analysis for
null hypothesis H0b and
the vital test statistics is also summarized in table 8. The F statistics of
12.709 (p-value = 0.000) indicates
that the regression, as a whole, is statistically significant. The coefficient
of determination (adjusted R2) suggests that about 53.9% of the
variation in financial performance is explained by the three explanatory
variables (PI, MI and SI), combined. The
prediction model is specified as follows:
FP = 0.00 + (0.614 ´ PI) +
(0.135 ´ MI)
+ (0.249 ´ SI)
(4)
Where b’20=
0.00, b′21
= 0.614, b′22
= 0.135 and b′23=
0.249
Table
8. Summary of regression for innovation strategies and financial performance
Regression results for financial performance |
|||
Adjusted R-squared |
f-value |
Sig. |
|
0.539 |
12.709 |
0.000 |
|
Standardized coefficient (Beta) |
t-Stat |
Sig. |
|
Intercept |
0.000 |
1.000 |
|
PI |
0.614 |
4.294 |
0.000 |
MI |
0.135 |
0.667 |
0.510 |
SMI |
0.249 |
1.331 |
0.194 |
As the standardized beta coefficients for
the three independent variables are non-zero, and the p-value = 0.000 for f
statistics, we have enough evidence to reject the null hypothesis H0b and conclude that there
is a statistically significant relationship between innovation strategies and
newspaper firms’ financial performance. The test of significance for
independent variables (measured by the t statistics) show that only product
innovation (PI) variable is statistically significant, while marketing
innovation (MI) and societal marketing innovations (SI) variables
are not statistically significant, for financial performance regression. In
other words, only product innovation contributes meaningful information in the
prediction of a newspaper firm’s financial performance. The sign of the standardized
beta coefficient for all three independent variables is consistent with prior
expectation. Taking a standardized beta coefficient for PI as an
example, it suggests that with every increase of one standard deviation in
product innovation, the newspaper firm’s financial performance rises by about
0.614 standard deviations.
A further insight is attained by implementing
the forward stepwise model
selection method, where we have used the criteria of highest adjusted R2 values,
for entry/removal of variables in the model. A significance level of .05 is
used and results for the best model according to adjusted R2 values
can be summarized as:
For
Market Performance Model: The f
statistics of 17.858 (p-value =
0.000) indicates that the regression, as a whole, is statistically significant.
The highest adjusted R2 value of 0.529 (compared to adjusted R2=
0.519 when all 3 independent variables were included) is obtained for the
regression model for MP. Here, PI is the dominant factor (with
beta coefficient= 0.508, sig-value = 0.001, importance= 0.632) and MI is
the other independent variable sustained in the model according to 95%
confidence level criterion (with beta coefficient = 0.387, significance-value=
0.008, importance= 0.368). The Koenker
test statistic value is 6.983, and the sign-value is 0.030. As the significance-value
for Koenker test is less than 0.05; we reject the null hypothesis of homoscedasticity.
The best model for market performance is summarized as:
MP = (0.508´PI) +
(0.387 ´MI) (5)
For
Financial Performance Model: The f
statistics of 19.222 (p-value = 0.000) indicates that the regression, as a
whole, is statistically significant. The highest adjusted R2 value
of 0.548 (compared to adjusted R2= 0.539 when all three independent
variables were included) is obtained for the regression model for FP. Here, PI is the dominant factor (with beta coefficient= 0.661, sig-value=
0.000, importance= 0.788) and SI is the other independent variable
sustained in the model according to 95% confidence level criterion (with beta
coefficient= 0.343, sig-value= 0.009, importance= 0.212). The Koenker test statistic
value is 4.544, and the sign-value is 0.103. As the sig. Value for Koenker test
is more than 0.05; there is no evidence of heteroscedasticity. The best
model for financial performance is summarized as:
FP = (0.661 ´n PI) +
(0.343 ´ SI) (6)
Discussion and Conclusion
The present study examined if any
relationship exists between innovation strategies and newspaper firm’s market
and financial performance (Hypotheses H0a
and H0b). The literature review in general has shown the significance of
innovation in product strategy for firms other than newsprint media (Amabile et
al., 1996; Bujis, 2013; Cronholm et al., 2017; Gumusluoglu et al., 2009; Hamel,
2006; Hamel, 2007; Jung et al., 2003; West et al., 1996). It has also been
reported that a greater level of innovation results in higher market and
financial performance for firms operating in different domains (Banbury &
Mitchell, 1995; Birkinshaw et al., 2017; Caves & Ghemawat, 1992; Hansen et
al., 2007; Low, 2006;Yamin et al., 1999). Further, Jaworski and
Kohli (1993) have found the self-assessment results as a better predictor of
firms’ performance as they overcome the effect of time-lag in the estimation of
firm performance due to orientation and innovation activities. The constructs
for Organization’s responsiveness (response design and response implementation)
in their work is identical to the construct for innovation strategies used in
the present work. So, the positive association between market orientation and
firms’ performance found in Jaworski and Kohli (1993)results are similar to the
positive association of innovation strategies and firm performance found in the
present work for self-assessed firm performance response. Altogether, the three
innovation initiatives (product innovation, marketing innovation, and societal
marketing innovations) account for about 50-55% of variations in the newspaper
firms’ market and financial performance scores.
This could be a positive message for the
newsprint media firms globally to invest more in innovation strategies for
overcoming the downtrend and survive in the turbulent times. The results
suggest that newspaper firm’s advertisement revenues, circulation numbers, loyalty
of customers, increase in circulation, and the trust of consumers’ surges more,
if the product supplied is user friendly, efficient and best among the rivals,
and there are enough efforts in terms of marketing innovations to make it more
attractive to consumers. Further, the results hint at an
increase in sales and profit of newspaper firm if it invests more in making its
product best among rivals, user-friendly and efficient, while the newspaper
firm also takes more interest in its social responsibilities and charity works.
The results should be understood in the backdrop of present market performance
model having slight heteroscedasticity while financial performance model is
devoid of heteroscedasticity (Best Linear Unbiased Estimator, BLUE). Due to the
reasonably high coefficients of determination in the regression, it may be possible
to predict the trend in newspaper firms market and financial performance using
the parameters estimates of present models, in the north and central India.
Another significant conclusion from the
present study is quite intuitive and relates
the market performance and financial performance. A correlation
coefficient of 0.855
between market performance and financial performance factor suggests
that sustained customers’ loyalty,
attracting fresh customers and constructing a progressive newspaper image leads
to an eventual increase in the circulation statistics and profit margins.
In conclusion, innovation
strategies could be one of the important factors which can facilitate the newsprint
media companies to be prominent of its rivals and also survive the challenges
from news websites, social media and cable TV news. Comprehensive
research including all the factors of marketing initiatives and their
interaction with environmental influence on firm’s performance would be an
improvement over the present study and very useful for marketing managers
working in the fields of newsprint media.
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Correspondence to: Shailja Khanduri, Doon Business School,
Dehradun, Uttarakhand, India-248011.
Shailja Khanduri (Ph.D.,
The IIS University, 2019) is working as an Assistant Professor of Economics at Doon
Business School, Dehradun, Uttarakhand, India-248011. Her research interests
are in marketing research, microeconomics, banking, gender issues, etc. She is a member of the American
Economic Association (446565).