How Formalization Hinders Di®erent Firm Innovativeness Types: Opening the Black Box with Evidence from a Service Industry Dilek Zamantili Nayir Department of Business Administration Faculty of Business Administration, Marmara University dznayir@marmara.edu.tr Ulrich Tamm Department of Economy Bielefeld University of Applied Sciences ulrich.tamm@yahoo.com Serdar S. Durmusoglu School of Business Administration Management and Marketing Department University of Dayton durmuser@udayton.edu Received 10 December 2010 Revised 12 March 2013 Accepted 25 April 2013 Published 23 June 2014 The purpose of this paper is to analyze the e®ects of organizational formalization on the behavioral, market, product, and process types of ¯rm innovativeness as well as the interplay between these di®erent innovativeness types. Based on data collected through a survey of the ¯nancial services industry in Turkey, the analyses show that formalization directly hinders both behavioral and market innovativeness. Moreover, as behavioral innovativeness in°uences product and process innovativeness, formalization's e®ect on these types of innovativeness are indirect. As expected, the study also ¯nds that process innovativeness facilitates both product and market innovativeness and that product innovativeness foster market innovativeness. This study makes a contribution to the literature by examining the linkages between formalization in ¯rms and the various ¯rm innovativeness types, which have previously been studied only separately. The study thus provides a richer understanding of the relationship between for- malization and ¯rm innovativeness types. Keywords: Organizational formalization; ¯rm innovativeness; service innovation; ¯nancial services; Turkey. 1. Introduction Today, ¯rms consider that innovativeness is not only a choice, but a necessity in order to create and sustain superior performance in the dynamic marketplace International Journal of Innovation and Technology Management Vol. 11, No. 5 (2014) 1450029 (22 pages) # . c World Scienti¯c Publishing Company DOI: 10.1142/S0219877014500291 1450029-1 Int. J. Innovation Technol. Management 2014.11. Downloaded from www.worldscientific.com by SYRACUSE UNIVERSITY on 02/03/15. For personal use only.