Innovative sustainability and stakeholders’ shared understanding: The secret sauce to “performance with a purpose”

Abstract

Firms report their innovative sustainability activities as a way to increase “firm performance with a purpose.” Managing effective sustainability to maintain its relevance and value to stakeholders through organizational ambidexterity is an important undertaking in a business environment that is increasingly concerned with corporate social responsibility. However, the research that links effective sustainability and long-term financial performance is inconclusive. This study uses content analysis and fsQCA to specify and model the pertinent conditions for innovative sustainability. The model shows that firms need to manage stakeholders with heterogeneous motives as a condition for effective sustainability in order to yield long-term financial performance. The findings extend the organizational ambidexterity theory and operationalize stakeholders’ shared understanding as a measure for the stakeholder theory in the context of corporate social responsibility research.