Organizational and Managerial Capabilities for Managing Innovation towards Sustainability

Although the research of sustainability transitions has shown that innovative firms have a crucial role in sustainability transitions. However, innovation management practices for innovation towards sustainability have received little theoretical and empirical attention in the literature. To innovate for sustainability, companies need to shift their focus from competitiveness alone to competitiveness and sustainability, which impacts the resources and competences of the companies for innovation. The main challenge of the companies is to identify, develop, and deploy the key resources and competences required for sustainable innovation activities. This raises questions about the organizational and managerial capabilities needed to effect innovation and change toward sustainability. This study adopts the dynamic capabilities approach to argue theoretically and to investigate empirically that firms need specific organizational and managerial capabilities to increase the degree of sustainability within their innovation activities. Cross-sectional data from the Community Innovation Survey of German manufacturing and service companies is used for testing the hypotheses advanced in this paper. Results from partial least square structural equation modeling (PLS-SEM) analyses show three capabilities are necessary to innovate for sustainability; i.e., sensing, seizing, and reconfiguring. The study also identifies and confirms the organizational routines that underlie these capabilities to achieve a better fit with sustainable innovation activities. Furthermore, it is found that the importance of the capabilities for sustainable innovations is context-dependent. These findings have important theoretical and practical implications for managing innovation towards sustainability.