Firms’ capabilities for sustainable innovation: The case of biofuel for aviation

Innovation is one of the increasingly important means by which companies can contribute to sustainable development. The shift of focus in business from competitiveness alone, to the combination of sustainability and competitiveness impacts firms’ capabilities for innovation. This process study aims to investigate what the organizational and managerial capabilities through which companies can innovate for sustainability are, referred to as dynamic capabilities for sustainable innovation. We address this question through a retrospective longitudinal case study of the attempts of the KLM Royal Dutch Airlines (KLM), which uses its influential position in the value chain to stimulatecproduction and use of biofuel for aviation. The study identifies critical organizational and managerial capabilities that are forming the basis of the successful realignment of a firm’s dynamic capabilities with its sustainable innovation strategies. We explain how these capabilities are built and strengthened for sustainable innovation and how these capabilities function throughout the development process of sustainable innovation. This study aims to contribute to a further theoretical and practical understanding of how capabilities are deployed by firms to create and implement sustainable innovation.