Arab Journal of Administration المجلة العربية للإدارة


The aim of this research is to study and analyze the management of innovation and its impact on the financial performance of the plants. In this study, 278 plants of all sizes of the Saudi Chemical industry were selected. The selection covers three regions; Makkah, Riyadh, and Eastern province. It was found that the ownership of plants is mostly joint ventures (83.10%) and the rest are wholly Saudi. Regarding number of years of experience for these plants, 65.11% of them have over 20 years. Using Structural Equation Modeling (SEM), the researcher found that almost 80% of the sample depends totally on companies outside Saudi Arabia in their innovation, and only about 4% share with foreign companies, while only 11.15% depend totally on themselves in their innovation. On the other hand, it turned out to be that 6.12% of the sample did not have any activity in this area. The study also pointed out the most important internal as well as external factors that contribute to innovation. Of the internal factors, the most important are: intensive R&D, top management support, and the experience of the Innovation team. On the other hand, the least important ones in this area are: participation of workers, training, and work environment. Whereas, the most important external factors are: product technology, continuous improvement, and the target market. On the contrary, pricing, time to enter the market and product quality are the least important ones in this regard. Finally, the researcher found a positive relationship between innovation and financial performance of the plants.