Sustainability-Oriented Innovation: Why are some companies lagging behind? A comparative case study

Abstract

Sustainability is arguably the biggest trend in business today and represents one of the greatest challenges humanity has ever faced. Consequently, companies are faced with mounting pressure from multiple stakeholders to be more aware of and handle the social and environmental impacts of their business activities. To succeed with the green transition, we need more sustainability-oriented innovation (SOI). Many companies assign considerable resources to SOI and launch important innovations on a regular basis. However, there are also laggards, and we have limited knowledge on why some companies lag behind. The purpose of this thesis is to provide some preliminary answers to this important question by exploring the following research question: Why are some companies’ laggards in relation to sustainability-oriented innovation? To answer this question, we reviewed the literature on SOI and performed a comparative case study of a leading and a lagging company. The research process consists of two phases, and a combination of deductive and inductive approaches was applied. We started deductively by developing managerial implications from the existing SOI literature, resulting in a novel normative framework. Secondly, primary data for our comparative case study analysis was gathered through semistructured interviews with key informants from both companies. The interviews were informed by the normative framework. For the second phase, we combined deductive and inductive reasoning. First, we use the normative framework to analyze the data from the first round of interviews. Subsequently, we used a grounded theory approach to come up with new insights through a second round of interviews. Our proposed normative framework provides managers with a tool to identify concrete weaknesses and areas of improvements in relation to SOI. Moreover, the empirical findings represent knowledge and insights which can support managers in prioritizing their SOI efforts to truly become more sustainable and tackle the challenges of the future. In addition, our study provides several theoretical contributions. Firstly, the normative framework can support scholars in identifying gaps and thereby III opportunities for future research on SOI. Secondly, based on a theoretical analysis, we present two conceptual contributions to the SOI literature by suggesting that absorptive capacity and psychological safety should be included as key concepts. Thirdly, our empirical findings add important insights into the SOI literature and highlights three central elements to why some companies lag being in terms of SOI. The first is the lack of sustainability integration. In relation to this point, we provide insight into the importance of hiring & training practices as well as the strategic positioning of companies. Secondly, our findings suggest that the lack of collaborative efforts can be central in answering our research question. Here we make important cross-industrial considerations and provide insights into the relevance of employee’s attitudes and mindset. Lastly, by utilizing Schein’s model for organizational culture, we add important insights to the cultural discussion in the SOI literature. We suggest that an underlying reason why companies lag behind in relation to SOI, is the absence of sustainability at the lowest level of the corporate culture – the basic underlying assumptions of the culture. This finding represents a novel contribution as Schein’s model has yet to be applied in the context of SOI. We hope scholars will continue exploring the role of culture and cultural assumptions in future research. We believe that new insights in this area have great potential in improving our knowledge of why some companies are leaders on SOI and others lag behind.