Abstract
Ongoing globalization and changing customer needs make it increasingly difficult for firms to survive in the long term. Innovation is considered an important tool for firms in this environment. In particular, a firm’s ability to cultivate innovative behaviour and implement product innovation for sustainability is important. This study explores resources and capabilities to enhance firm innovation behaviour and implementation of sustainable product innovation. The results provide insights on how firms can manage strategies for future sustainable innovations. We used a sample of 645 small- and medium-sized enterprises and presented the conceptual framework according to a resource-based view and relational capital. We specified three independent factors that enhance sustainable innovation and superior performance: market orientation, managerial ties, and government support. We used a questionnaire survey and structural equation modelling to evaluate the conceptual model. We found that interactions between business ties, customers, and competitor orientation can enhance sustainable product innovation, whereas interactions between government support and political relations can enhance the sustainability of innovation behaviour. Moreover, product innovation and innovation behaviour are mediators that can lead to superior firm performance. The results suggest ways entrepreneurs and public policy makers can promote sustainable innovation.
Highlights
A changing external environment, varying customer characteristics, and more sophisticated customer needs have made it increasingly hard for firms to retain competitiveness
This study addresses a gap in the research by exploring the manner in which firms can effectively use resources and capabilities, both external and internal, to enhance sustainable product innovation and sustainable innovation behaviour, which can have a significant effect on firm performance
Drawing on a new integration framework within the resource-based view, we focus on how small and medium-sized enterprises (SMEs) can reinforce sustainable innovation and ensure superior firm performance
Summary
A changing external environment, varying customer characteristics, and more sophisticated customer needs have made it increasingly hard for firms to retain competitiveness. Innovation involves firms altering existing methods or creating new methods related to the provision of products and services. A firm’s responsibility is to cultivate and integrate internal and external resources to sustain innovation excellence [9] This can take the form of sustainable innovation activities: developing new products, updating existing products, and shaping employee behaviour [10]. These activities can create unique and difficult-to-imitate advantages [11]. In our study, we focus on small and medium-sized enterprises (SMEs) These are creative businesses with the need to develop different strategies through investment in sustainable innovation to meet the demands of changing markets
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