Management Practices, Innovation, and Firm Performance: An Integrated Management–Economics Perspective

Abstract

The relationship between management practices, innovation, and firm performance has become a central concern at the intersection of management and economics, particularly in the context of increasingly competitive and technology-driven markets. Empirical evidence indicates that structured management practices are systematically associated with higher productivity, profitability, and firm survival, and that these effects operate partly through improved workforce selection and stronger incentives. At the same time, innovation has been recognized as a key internal driver of firm-level and macroeconomic growth, with studies showing that innovation capabilities and innovation management are positively related to organizational performance, albeit with potential diminishing returns at high levels of innovation intensity. This article develops a conceptual and integrative review of the linkages between management practices, innovation, and firm performance, drawing on both economics and management literature. It first outlines core theoretical foundations, including endogenous growth theory, resource-based and dynamic capabilities perspectives, and organizational capital. It then presents a review of empirical literature on management practices and productivity, and on innovation and performance, highlighting mediating mechanisms such as human capital, monitoring, targets, and people management. Building on this, the article proposes an integrated framework that positions management quality and innovation capability as mutually reinforcing drivers of firm performance and long-run competitiveness. A sample conceptual table is included to illustrate how firms might align management dimensions with different innovation types. Finally, the paper discusses managerial and policy implications for emerging economies, with particular relevance to Indian firms seeking to move up the global value chain. The article is intended as a full-length exemplar for a management and economics journal and includes a focused review of literature and references.