Advancing sustainability-oriented innovations in industrial markets

Abstract

Sustainability has become a new imperative for industrial firms as the global limits of environmental impacts are becoming more evident. Scarcity of natural resources, tightening environmental regulations and consumer preferences are among the mechanisms which drive firms to improve their sustainability. Although there isn’t a clear correlation on how corporate sustainability performance effects financial performance, there are many examples of firms incurring large losses when sustainability is neglected and firms lose legitimacy. However, for some firms, sustainability can also be a source of competitive advantage. This study focuses on advancing sustainability-oriented innovations. If firms are to make sustainability a competitive advantage, it requires a shift from insular innovations focused on the operational footprint of the firm towards systemic innovations focused on the strategic handprint of the firm. This study examines how to accomplish this shift through two key activities: demonstrating the value of sustainability-oriented innovations and building collaborative networks to develop the innovations. This study was conducted through a mixed methods study comprised of two multiple case studies covering 35 organizations, an analysis of 32 firms’ corporate press releases, and a qualitative Delphi study with 40 informants. The findings of the study characterize advancing sustainable innovation as a multi-stage process. Firms should build effective value propositions which demonstrate the customer and societal value of their offerings in order to gain customer acceptance and build legitimacy with their wider stakeholder networks. They should also create collaborative networks with business partners, public sector and societal actors to develop new innovations. The findings introduce a framework to build sustainable value propositions for industrial offerings. They also elaborate four forms of networks for sustainability collaboration and identify polycentric governance forms for managing these networks. Lastly, they identify the barriers to sustainability-oriented innovations and explore how these can be overcome. The findings help managers and policy-makers create and promote sustainability-oriented innovations with a higher potential for impact.