Graduation date: 2007Innovativeness, or the propensity of a firm to create and/or adopt new products, process and business systems, has been measured using several methods in previous research. Examples of theses methods include current technology, self-evaluation, research and development funding, the number of new products, and intellectual property. In addition to the multiple methods used to measure innovativeness, there have been numerous conceptualizations and definitions of innovativeness. The plethora of definitions, conceptualizations and measurement methods have resulted in inconsistent findings regarding innovativeness and its effect on firm financial performance. In this dissertation, a two-stage process was used to investigate innovativeness within the North American softwood sawmilling industry and develop a new scale for measuring innovativeness. In the first stage, innovativeness was measured using three methods: a self-evaluated scale, current sawmill technology, and a new scale developed in this dissertation as “propensity to create and/or adopt”. Results from these three scales were then compared to assess how well the new scale measured innovativeness. The new scale was then subjected to a structured scale refinement process to assess which items would be retained for Stage II of the scale refinement process. As a result of this scale refinement process, the scale was reduced from 25 items to 18 items. In stage II of this dissertation, the 18-item scale was used to measure innovativeness and was subjected to a structured scale refinement process. The 18 items were reduced to 15 items and the 15 items were used to assess the relationship between innovativeness and financial performance using structural equations modeling. This relationship was found to be significant and positive. Additionally, firm size, as measured by both the number of employees and annual production, were found to be significant moderators of the relationship between innovativeness and financial performance. This dissertation makes several unique contributions to the literature. One contribution is the thorough review and critique of previous literature regarding firm innovativeness. The most significant contribution this dissertation makes to the literature is developing a comprehensive firm innovativeness scale using a structured scale development process. The final contribution is investigating the relationship between innovativeness and financial performance using this newly developed scale.