Background: Hospitals around the world dedicate increasing attention and resources to innovation. However, surprisingly little is known about the nature of hospital innovativeness and its relationship with organizational performance. Given both the specific characteristics of the hospital sector and the rather mixed evidence from other industries, a positive innovation-performance link should not be taken for granted but requires empirical examination. Purposes: The purposes of this study were to introduce a perspective of hospitals as vital generators of innovation, to unpack the concept of innovativeness, to propose a measurement model for hospital innovativeness, and to empirically investigate the innovativeness-performance relationship. Methodology: We conducted a large-scale empirical study among the entire population of public hospital organizations that are part of the English National Health Service (n = 173) and analyzed the data using exploratory factor and regression analyses. Findings: Our analyses suggest a significant positive relationship between science- and practice-based innovativeness and clinical performance but provide less unambiguous support for the existence of such a relationship between innovativeness and administrative performance. In particular, we find that higher levels of innovativeness are rather associated with superior quality of care than with measurable bottom-line financial benefits. Practice Implications: Hospitals investing in innovation-generating activities might find their efforts well rewarded in terms of tangible clinical performance improvements. However, to achieve measurable financial benefits, numerous hospitals have yet to discover and capture the commercial value of some of their innovations-a challenging task that requires a holistic innovation management and an effective network of complementary partners.
