Sustainability‐oriented innovations – Enhancing factors and consequences

Abstract

AbstractThis study aims to explore internal firm factors that enhance sustainability‐oriented product and process innovations. Formulated on resource‐based theories and the Porter hypothesis, it further investigates the impact of these innovations on the economic performance of firms. Adopting a quantitative research methodology, the study uses partial least squares structural equation modelling on data collected from 251 middle to senior management employees working in manufacturing‐based consumer goods firms. Dynamic capabilities, sustainable organisational innovations and smart technologies are concluded as significant factors that enhance sustainability‐oriented innovations. A strong positive impact of sustainability‐oriented innovations on organisation's economic performance is established, with green competitive advantage playing a strong mediating role and green image as a weak mediating variable. Interesting insights are gained in action‐identity‐image relationships. A strong positive relationship is established between sustainability‐oriented innovations and green organisational identity. Green organisational identity further promotes green image through green commitment. The study provides managers insights on internal factors that encourage sustainable innovations and harness right opportunities to ensure economic success. The interplay between action, identity, and image provides policymakers right tools to frame appropriate strategies to create sustainability orientation. The study has limitations as it is cross sectional and hence fails to capture the dynamics over time and it uses subjective measures.