Managing Sustainable Innovation

Vanessa Ratten, Marcela Ramirez-Pasillas, Hans Lundberg, Vanessa Ratten, Marcela Ramirez-Pasillas, Hans Lundberg

• Publisher: Routledge
• Year: 2019
• ISBN:
  9780429559983
• Edition: 1
• Topic: Economics
• Subtopic: Sustainable Development
• Index: Economics

This book is an insightful text looking at sustainable innovation and the emerging fourth sector, i.e. hybrid organizations, through an interdisciplinary approach.

The book illuminates what hybrid organizations are and how they generate new ways of creating blended value to secure the well-being of future generations and preservation of ecological services. The book also discusses how sustainable innovation may offer creative solutions to societal issues, the sharing economy and the circular economy.

This book will appeal to those taking MBA and EMBA programmes, and those with an interest in creating sustainable business and innovation solutions.

1

Managing sustainable innovation

Vanessa Ratten, Marcela Ramirez-Pasillas and Hans Lundberg

Introduction

The word ‘sustainable’ when added to the word ‘innovation’ results in a broader approach to change (Ratten, Jones, Braga and Marques, 2019a). This is due to sustainability being considered as a systemic approach to competitive market dynamics. In the past, innovation was viewed as being in the realm of business and there was little discussion on the role of stakeholders in its development (Ratten, 2018). This has changed with citizens becoming more vocal about their rights and those of corporations, which has resulted in sustainable innovation becoming a useful way to discuss innovations that place an emphasis on all stakeholders such as customers, employees and regulator agencies (Ratten and Dana, 2017). This means that when practising innovation, the impact on local communities needs to be considered as well as the impact on advocacy groups.

Sustainable innovation focuses on the social changes made possible as a result of innovation; this differs from the more environmental focus of green innovation (Schiederig, Tietze and Herstatt, 2012). This means unlike ecological or environmental innovation, sustainable innovation has more of a business focus in its application to the environment. Thus, there is an emphasis in sustainable innovation on creating environmental change but at the same time taking into account financial considerations (Santos, Marques, Ferreira, Gerry and Ratten, 2017). This means the impact on business of incorporating environmental effects is acknowledged but at the same time weighed up against financial effects. Green innovation differs from sustainable innovation as it is solely focused on environmental effects. The main categories of green innovation are: managerial, product, process and technological (Tseng, Wang, Chiu, Geng and Lin, 2013). Managers need to understand the intricacies of environmental effects on corporate strategy. To do this they need to assess the type of innovation from a product, process or technological point of view (Ratten, Braga, Alvarez-Garcia and Del Rio-Rama, 2019). The literature on green innovation can be categorized according to a process or policy perspective (Ar, 2012). The process view considers the design element of green innovation in terms of the steps needed to take an initial idea to fruition. This involves putting a plan in place for how the innovation will be developed in terms of time and resources. The policy point of view looks at the impact of innovation in terms of societal effects. This means that there needs to be a repository of knowledge about the likely effects of the innovation (Ratten, Jones, Braga and Marques, 2019b).

There has been an emphasis on sustainable forms of development in light of changing societal conditions. The increasing global population and pressures this has placed on the environment have led to an increased interest in sustainability. Sustainable development is defined as meeting “the needs of the present without compromising the ability of future generations to meet their own needs” (Brundtland, 1987:24). This definition recognizes the needs of current citizens but highlights the impact they have on future societal developments. Due to an increased awareness of factors such as global warming, sustainable development is a way to put into practice environmental goals that can provide benefits to future generations. The development is conducted by absorbing the effects of current activities in a way that provides opportunities to others in the future. Sustainable development as an expression means different things depending on the context but most conceptualizations consider it as a way to acknowledge both current and future needs. Some countries like Germany are considered lead markets for sustainable innovation due to the societal and political awareness of environmental factors (Beise-Zee and Rennings, 2005).

Sustainable innovation involves developing and applying new business practices in a way that contributes to sustainability targets (Rennings, 2000). The main elements of a business model needed for sustainable innovation are: the value proposition, supply chain, customer interface and financial model (Boons and Ludeke-Freund, 2013). The value proposition refers to the financial, social and ecological effects of the sustainable innovation. Some effects are considered more valuable than others depending on the stakeholder’s perspective. Thus, there needs to be a balance between each different effect in terms of production systems. This will be influenced by the nature of the sustainable innovation and whether it requires different stakeholder engagement. The supply chain refers to the steps needed to source materials and make them a sustainable innovation. Some products are more complex and require more steps, which leads to some socio-ecological considerations. The customer interface refers to the level of interaction between producers and customers in the development process. The financial model considers the economic factors required to have an environmental impact.

In order to build sustainable forms of innovation, there needs to be an articulation about the requirements and plan for the future. This involves discussing the vision for the innovation and what kinds of learning processes are needed to fulfil this purpose. As part of this process, the nurturing of ideas is needed as a way to attract attention to the innovation. This can involve companies focusing on sustainability by using social networks to disseminate information and brainstorm ideas. Corporate sustainability is defined as “improving the economic, environmental and social performance of companies and is also known as the triple P of business (people, planet and profit)” (Bos-Brouwers, 2010: 417). This facilitates the sourcing of people and expertise required to make the sustainable innovation.

In this chapter, we attempt to fill the gap in the literature on sustainable innovation by addressing the following issues: How is sustainable innovation different to other forms of innovation? What is the meaning of sustainability in an innovation sense? And how does sustainable innovation contribute to societal development? The remainder of this chapter is structured as follows. In the next section, the importance of sustainability in innovation management is briefly summarized. Then some suggestions for future research are stated that include potential research questions.

Innovation and sustainability

Due to increased interest in innovation and sustainability, it seems natural that a new field of research titled ‘sustainable innovation’ has developed. The research on sustainable innovation has grown in popularity due to the need to incorporate sustainability within business practices. Boons and Ludeke-Freund (2013) suggest that sustainable innovation can be analysed at three levels: organizational, inter-organizational and societal. The organizational level involves focusing on firms and how they embed sustainable forms of innovation. To do this, it is useful to look at the role of leaders in managing change and their attitude towards sustainability. Some leaders will have more of an inclination towards sustainability due to their ethical beliefs. Others might rely more on societal obligations when deciding whether to incorporate sustainability initiatives. Environmental considerations are important to firms and shape their strategic direction. However, the capacity of a firm to be environmentally friendly can depend on their size and willingness to change. Smaller firms may lack the financial resources to be sustainable although sometimes they can overcome resource obstacles by being sustainable in other ways. Larger firms normally have more resources and time to act in a sustainable manner and this helps their global competitiveness.

The inter-organizational level focuses on how firms collaborate and compete regarding sustainable innovation. More firms have partnerships, alliances and networks that enable them to share resources. This helps build a sense of community around sustainability initiatives. There are other ways that firms collaborate depending on the context, including through value co-creation. The benefit of collaboration is in the sharing of knowledge that enables information to be disseminated about sustainability. This helps build a community of practice around sustainable innovation and provides a pathway to transformational change. Competition is part of an industry, but due to the increased complexity of the global business environment it especially applies to sustainability initiatives. At the heart of competition is a need for continual improvement in order to stay ahead in the marketplace.

The societal level involves focusing on socio-demographic shifts in the environment. This is important as there is a greater emphasis on work/life balance and the way in which entities interact in the natural environment. Issues such as climate change are at the forefront of people’s minds and this is reflected in their purchasing decisions. A range of industries are affected by sustainable innovation and they include chemicals, construction, electricity, food, glass, machinery, medical, mining, motor vehicles, textiles and wood. Within these industries, the intensity of the innovation varies from low, medium to high technology. This means that the innovation outcome ranges from a small improvement to a more impactful change on society. Most innovation outcomes tend to focus on energy cost or resource reduction as this is easier to quantify, although other benefits can include improvement in health and safety that is made possible by improved practices. Thus, continuous development of sustainable innovation practices is needed in order to improve societal well-being.

The breadth and depth of sustainable innovation is an important consideration in term...

Table of contents

• Cover
• Endorsement
• Half Title
• Series Information
• Title Page
• Copyright Page
• Contents
• Figures
• Tables
• Contributors
• 1 Managing sustainable innovation
• 2 Integrating Base-of-the- Pyramid business into global supply chains
• 3 Indigenous folkways, subsistence markets, and rural development in the Caribbean: A case study of a social bricoleur
• 4 Co-evolutionary prospects and sustainability
• 5 Drivers and barriers to sustainable innovation in SMEs in the context of small countries
• 6 The contribution of the Internet of Things to the emergence of sustainable innovative cities
• 7 Circular Business Model: The case of a tire recycling plant in the Bío-Bío Chilean region
• 8 Sustainable entrepreneurial opportunities and innovations in the Queenstown food sector
• 9 Determinants of sustainable innovative capacities in transition economies
• 10 Social innovation and sustainability: A comparison case study based on the implementation and evaluation of small-scale actions in Atlantic regions
• 11 Rural sustainable innovation and creative industries: Case study of rural tourism households in Pirot, Serbia
• Index