Exploring Sustainability-Oriented Innovation Capabilities in the Indonesian Manufacturing Firms

Abstract

Although the studies on sustainability-oriented innovation (SOI) have grown significantly in the last decades, to date research on specific SOI capabilities required by the firm to be a more sustainable innovator is still under-explored. Capability-based perspective is revisited to become a foundation for this empirical study. Specifically, capability theories linked to innovation and sustainability fields involved, including innovation management capabilities (IMC), natural resource-based view (NRBV), and social RBV (SRBV) with dynamic capabilities as overarching theory. As the nature of this research is exploratory, a qualitative approach is employed uses semi-structured interviews to 33 owner and manager of manufacturing firms in Indonesia, supplemented by site visit and archival documentation for triangulation. The findings suggested that around half of the firms studied adopting SOI with an operational optimisation approach. It is found from the data that transition is exists between SOI approaches. Firms operating at a higher level of SOI approach have specific dynamics capabilities above baseline ordinary SOI capabilities (production, marketing, environmental and social) that help them become a more sustainable innovator. These SOI dynamics capabilities include capture SOI idea, proactivity to SOI opportunity, mechanism to implement SOI, stakeholder management for SOI, SOI governance, and SOI continual learning.