TY - JOUR

T1 - Linking stakeholder engagement to profitability through sustainability-oriented innovation

T2 - A quantitative study of the minerals industry

AU - Ghassim, Babak

AU - Bogers, Marcel

PY - 2019

Y1 - 2019

N2 - Firms' capability to develop sustainability-oriented innovation (SOI) can be enhanced by stakeholder engagement (SE) in order to acquire a wide range of external knowledge to support innovation efforts and outcomes. While we understand some of the transactional and relational attributes at stake for firms to leverage engagement with external stakeholders, we do not yet fully understand all the underlying mechanisms that are conducive to greater SOI outputs. At the same time, stakeholder theory emphasizes the importance of such engagement for firms’ financial performance (FP), even though the related findings are far from conclusive. Therefore, this paper suggests and tests a mediation model to investigate the associations between SE, SOI and FP. Based on data collected from 101 mineral companies in Norway, the results show that both transactional and relational interactions are important for improving SOI outputs, and that SOI fully mediates the association between SE and FP (measured by profitability). This suggests that external engagement activities do not directly link to FP, and that the financial benefit begins to appear once a firm is able to transform the acquired knowledge from external stakeholders into innovative outputs. Such open innovation approach thus requires a sustainability orientation to ultimately materialize into a performance benefit.

AB - Firms' capability to develop sustainability-oriented innovation (SOI) can be enhanced by stakeholder engagement (SE) in order to acquire a wide range of external knowledge to support innovation efforts and outcomes. While we understand some of the transactional and relational attributes at stake for firms to leverage engagement with external stakeholders, we do not yet fully understand all the underlying mechanisms that are conducive to greater SOI outputs. At the same time, stakeholder theory emphasizes the importance of such engagement for firms’ financial performance (FP), even though the related findings are far from conclusive. Therefore, this paper suggests and tests a mediation model to investigate the associations between SE, SOI and FP. Based on data collected from 101 mineral companies in Norway, the results show that both transactional and relational interactions are important for improving SOI outputs, and that SOI fully mediates the association between SE and FP (measured by profitability). This suggests that external engagement activities do not directly link to FP, and that the financial benefit begins to appear once a firm is able to transform the acquired knowledge from external stakeholders into innovative outputs. Such open innovation approach thus requires a sustainability orientation to ultimately materialize into a performance benefit.

KW - Mediator

KW - Open innovation

KW - Profitability

KW - Stakeholder engagement

KW - Sustainability

U2 - 10.1016/j.jclepro.2019.03.226

DO - 10.1016/j.jclepro.2019.03.226

M3 - Journal article

AN - SCOPUS:85064168108

VL - 224

SP - 905

EP - 919

JO - Journal of Cleaner Production

JF - Journal of Cleaner Production

SN - 0959-6526

ER -