Sustainable Innovation in the Financial Sector during the Corona Crisis: How Discontinuity Affects Sustainable Innovation, Sustainable Entrepreneurial Orientation, and Absorptive Capacity

Abstract

The corona crisis caused discontinuity within the financial sector, which has further increased the importance of innovation for sustainability and the capability to manage discontinuity. The aim of this research is to investigate how the corona crisis affected the relationship between sustainability-oriented innovation, sustainable entrepreneurial orientation, and absorptive capacity in the financial sector. Empirical research was carried out in the Dutch financial sector during the corona crisis by means of semi-structured interviews with senior managers, semi-structured group interviews with employees, observations, and documentation. The results of this qualitative exploratory case-study research show that the corona crisis has caused discontinuity for the case organization, which has led to an increase in uncertainty and a decrease in risk appetite. However, the degree of proactivity, innovativeness, knowledge adaptation, knowledge acquisition, knowledge exploitation, and knowledge transformation have also increased as a result of the corona crisis. Therefore, the case organization was able to manage discontinuity and realize more sustainability-oriented innovation. Findings seem to indicate that for the case organization, the corona crisis had a predominantly positive effect on (the relationship between) sustainability-oriented innovation, sustainable entrepreneurial orientation, and absorptive capacity. This research has several theoretical and practical implications and contains recommendations for further research and practice.

1. Introduction

The COVID-19 pandemic, which broke out at the end of 2019, has led to a global crisis; the so-called corona crisis [1]. The corona crisis is a very unique and unexpected event, which has caused discontinuity (a critical development in the environment that causes uncertainty, disruption, complexity, etc.), created major challenges for organizations, societies, and the environment worldwide, and thereby changed the innovation context [1,2,3,4,5,6,7,8].

Because financial service providers have a large, often primary responsibility for the stability of the economy and therefore have a significant role in society and the environment, the corona crisis has particular caused discontinuity in the financial sector [9,10,11,12]. This crisis seems to have changed the perspective on sustainability in the financial sector. It seems to have increased the importance of sustainable innovation (an innovation aimed at creating economic, environmental, and social value) and the need for capabilities to manage the consequences of the corona crisis [12,13,14,15,16].

A sustainable innovation can also be defined as sustainability-oriented innovation [17,18]. A variety of studies show that sustainability-oriented innovation contributes positively to economic results, the realization of environmental and social objectives, and to the improvement of the competitive position of an organization [19]. However, the literature on the effect of crises on innovation predominantly assumes that crises negatively affect innovation [2,20,21]. The supposed negative impact of a crisis on innovation is explained, for example, by the fact that crises are accompanied by a decline in economic output, less investment in innovation, and lower productivity [22,23]. Various studies stress the need for an organization to have the capability to manage discontinuity so that the organization is able to innovate in a complex environment [19,24,25,26,27]. Capabilities that are positively related to an effective, successful realization of sustainability-oriented innovation [28,29,30] are sustainable entrepreneurial orientation (the degree of orientation towards sustainability and entrepreneurship) and absorptive capacity (the ability to learn and develop knowledge) [24,31,32,33].

Much scientific research has been devoted to how discontinuity caused by crisis affects innovation, sustainable entrepreneurial orientation, and absorptive capacity [5,27,30,34,35]. Despite the importance of knowledge and more understanding about the consequences of crises on innovation, little is known about the effect of crisis on sustainability-oriented innovation, and the relationship between sustainability-oriented innovation, sustainable entrepreneurial orientation, and absorptive capacity [36]. Moreover, the vast majority of studies focus on the effects of financial and economic crises on innovation [2,20,23,24,35,37,38]. Research into the effect of the corona crisis on these concepts–specifically in the financial sector—is limited [6,16].

Filling this theoretical lacuna is relevant because the corona crisis cannot be compared with previous financial and economic crises. Previous crises had consequences predominantly for the economy, while the corona crisis can be characterized as an economic, social, and environmental crisis [12,13,39,40]. The corona crisis is a highly exceptional, unique, complex, and unpredictable global crisis, affecting organizations, the economy, society, and the environment [1,16]. Given the unique characteristics of the corona crisis and the related increased importance of sustainability within the financial sector, we consider it important to gain more insight and understanding about how the corona crisis affects sustainability-oriented innovation, sustainable entrepreneurial orientation, and absorptive capacity.

The overarching goal of our study is to investigate how the corona crisis affects sustainability-oriented innovation, sustainable entrepreneurial orientation, absorptive capacity, and the relationship between these concepts in the financial sector. To this end, we conducted a qualitative exploratory case-study.

The results of this case-study have been reported in this paper. This paper concludes with the discussion, theoretical contribution, limitations, and recommendations for further research, practical implications, and the overall conclusion. The main contribution of this research is to extend the current knowledge about the effect of crisis on sustainable innovation, and the effect of the corona crisis on (the relationship between) sustainability-oriented innovation, sustainable entrepreneurial orientation, and the absorptive capacity in the financial sector.

2. Theoretical Background

2.1. Corona Crisis—Discontinuity

Discontinuity is defined as an adverse development in the environment of an organization [5,7,37]. Discontinuity is caused by an unforeseen event (e.g., a crisis), which has a major impact on an organization, puts pressure on the continued survival of an organization, can lead to a higher degree of uncertainty, and changes the innovation context [4,6,7]. Given its uniqueness, complexity, and unpredictability, it is assumed that discontinuity caused by crises can affect the relationship between sustainability-oriented innovation, sustainable entrepreneurial orientation, and absorptive capacity in a variety of ways [2,3,5,24,32]. Discontinuity shows to what extent an organization is able to adapt to a complex environment [4]. The corona crisis is an example of an event that causes discontinuity, increases the degree of uncertainty, and has an impact on organizations [12,41]. It has been characterized as a highly exceptional, complex, and unpredictable crisis, affecting organizations, the economy, and society [6,16].

2.2. Sustainability-Oriented Innovation

The sustainable development perspective relates to fulfilling a current need, without compromising the fulfilment of a future need [18,42] and focusing on what needs to be preserved and developed [43]. In that vein, innovation for sustainability seeks to create economic, environmental, and social value [17,44,45,46], in a way that the situation improves and the interests of all stakeholders are optimally taken into account [18,47]. In general, sustainability is considered one of the main sources of innovation for organizations [47,48]. As a result of the previous financial and economic crises, the focus on sustainability has increased and organizations are constantly looking for ways to effectively and successfully realize innovations [35,44,47,49].

In the literature about the sustainable development perspective, various concepts are identified [18]. Some examples of these concepts are sustainability-driven innovation, Corporate Social Responsibility-driven innovation, and sustainability-related innovation [18]. The various concepts all aim at capturing innovating for sustainability [17,19]. Sustainable innovation is therefore seen as a process aimed at developing and realizing sustainability and therefore defined as sustainability-oriented innovation [17,18,19].

Sustainability-oriented innovation relates to the sustainable innovation of a product/service, process, and organization [18,50] with the aim of creating economic, environmental, and social value [17,19,45,46]. By incorporating the principles of sustainability into the innovation design, integrating new innovation opportunities, promoting interaction with the external environment, and limiting the use of resources [17,18], costs are reduced, which contributes positively to the continued survival of an organization (economic value), the environment (environmental value), and the quality of life (social value) [18,19]. Reduced costs improve the competitive position and the overall performance of an organization [17,19,46,50]. It is important to note that in practice the creation of the different types of value needs to be balanced. However, a crisis can cause discontinuity, change the innovation context [6,7], and affect sustainability-oriented innovation [2,22,51]. Various scientific studies hypothesize that innovation in general is negatively affected by crises [2]. According to these studies, this negative effect of a crisis on innovation is explained by the fact that the willingness to innovate decreases, there is less investment in innovation, the innovative performance decreases, and fewer innovation activities take place during crises [6,20,38].

2.3. Sustainable Entrepreneurial Orientation and Absorptive Capacity

The effectiveness and successful realization of sustainability-oriented innovation and managing discontinuity caused by crises is highly dependent on the extent to which an organization has certain capabilities [19,24,25]. Capabilities that are positively related to an effective, successful realization of sustainability-oriented innovation and managing discontinuity are sustainable entrepreneurial orientation and have an absorptive capacity [28,30,31].

Sustainable entrepreneurial orientation relates to the extent to which an organization is integrally oriented towards sustainability and entrepreneurship [43,52]. It is a strategic orientation based on two other types of orientations, namely entrepreneurial orientations and sustainable orientation. Entrepreneurial orientation refers to decision-making processes involving entrepreneurial actions and sustainable orientation refers to the integration of sustainability in the organizational processes and activities [28]. Sustainable entrepreneurial orientation consists of the aspects proactivity, risk appetite, and innovativeness [32,53]. The extent to which an organization actively searches for new possibilities and opportunities (proactivity), the extent to which an organization is willing to do something new and unknown in an uncertain and a complex environment (risk appetite), and the extent to which an organization experiments with creative solutions (innovativeness) largely determines the effectiveness and success of sustainability-oriented innovation and managing discontinuity caused by crises [19,52,53]. Discontinuity can also have a direct effect on sustainable entrepreneurial orientation and influence the degree of proactivity, risk appetite, and innovativeness [24,31,54]. For example, proactivity, innovativeness, and risk appetite increase when discontinuity occurs [32,55].

Absorptive refers to the ability to manage knowledge, i.e., the ability to learn and the extent to which knowledge and information is developed [29,33]. Absorptive capacity is instrumental to explaining organizational processes. There are different definitions, but the general consensus is that absorptive capacity is a multidimensional construct. It consists of four aspects: knowledge acquisition, knowledge adaptation, knowledge transformation, and knowledge exploitation [25,56,57]. Acquisition is related to the capability to identify and acquire knowledge. The direction, speed, and intensity of the acquisition of knowledge is important in the quality. Routines and processes that enhance the interpretation and analysis of the knowledge is related to the assimilation. Transformation refers to the capability to combine knowledge and form routines, interpreting knowledge in a new way. Especially in the context of a crisis, existing knowledge or routines could be interpreted differently, and knowledge is transformed. Exploitation refers to the routines that allow knowledge to be refined and exploited [33]. Absorptive capacity is often considered to be dynamic in that it is a learning mechanism that updates the organizational routines. The learning process can be different over time and when affected by external and internal forces [33]. A crisis is such a force that could influence the way the absorptive capacity is used and that influences sustainable innovation.

Various studies have shown that the effective and successful realization of sustainability-oriented innovation and managing discontinuity caused by crises highly depends on the extent to which an organization acquires knowledge (identifying and obtaining external knowledge), adapts knowledge (analyzing and understanding knowledge), transforms knowledge (combining existing and new knowledge), and exploits knowledge (applying and using existing and new knowledge) [25,33,56]. The aspects of absorptive capacity can also be directly influenced by discontinuity [19,24]. For example, discontinuity caused by crises has an activating effect on the acquisition, adjusting, transforming, and exploiting of knowledge [25,33].

3. Method

3.1. Research Approach

A qualitative exploratory case-study design was used to study how the corona crisis affects the relationship between sustainability-oriented innovation, sustainable entrepreneurial orientation, and absorptive capacity. This research design aims to explore empiricism in a real-life setting and answer the ‘how and what’ question. In addition, this design allows for a holistic approach and offers a high degree of flexibility. This flexibility was considered desirable, as new insights can be gained during the conduct of an exploratory study that can change the direction of the research [58].

3.2. Case Selection and Description

The study was carried out within a Dutch financial service provider during the corona crisis. The case organization provides mortgage loans to consumers, has more than 300 employees, and has grown into one of the largest financial service providers on the Dutch financial market. The case organizations’ mission is to offer sustainable solutions to customers, healthy financially sustainable growth, and corporate responsibility. The reason for choosing this particular case is threefold. Firstly, the case organization decided in 2019 (before the corona crisis) to implement a strategic change process. This process is aimed at changing behavior, improving performance, and sustainably improving capabilities. With this, the case organization tries to transform the organization into an organization that responds to the complexity of its environment more quickly and can contribute more effectively to the strategic objectives. However, as a result of the corona crisis, the innovation context has completely changed, which has put this process under pressure. Consequently, the creation of sustainable competitive advantage with sustainable innovation for the case organization has also come under pressure. Therefore, this case organization is particularly suitable for the purpose of our study. Secondly, due to the corona crisis, the importance of sustainability-oriented innovation and the ability to manage discontinuity has become even more important for the case organization and the sector in which the organization operates. Hence, these circumstances make it possible for us to study the effect of the corona crisis on the relationship between our key concepts in this organization. Thirdly, the case organization is a large financial service provider on the Dutch financial market. As a result, the findings of this study can be representative of similar organizations in the financial sector.

3.3. Data Collection

We used primary data sources and secondary data sources. The selected data sources are related to the topic of this study, the overarching research goal, the identified problem, and the theoretical framework. As primary data, we conducted six semi-structured interviews, two semi-structured group interviews, and two observations. For data triangulation we used secondary data sources. These sources consist of the company documents, recording decisions made with regards to sustainable innovation in the period before the corona crisis (year: 2018 and 2019) and in the period during the corona crisis (year: 2020).

The in-depth interviews were at least one hour long and were structured around the concepts of this research: sustainability-oriented innovation, sustainable entrepreneurial orientation, absorption capacity, and discontinuity due to the corona crisis. In this way, we ensured that the coding was aligned with the structure of the concepts. The semi-structured interviews were conducted with six senior managers. These senior managers are responsible for and decision-making in issues about sustainability-oriented innovation. The semi-structured group interviews were held with seven employees divided into two groups. All employees are involved in the development and realization of sustainability-oriented innovation. By consciously choosing employees with different disciplinary perspectives and rationalities, we tried to promote interaction and discussion between respondents [58,59,60]. The observations took place in the Commercial and Policy Consultation and the Corona crisis Consultation groups. These consultative bodies deal with tactical and strategic issues related to sustainability-oriented innovation and the corona crisis. During the observations, the researcher had the role of ‘observer as participant’; in this way, orientations, attitudes, and behaviors of actors could be observed freely [58]. The reason for collecting data by means of observations is therefore the effectiveness of this method [58].

3.4. Analysis

The data were analyzed with thematic analysis. Thematic analysis consists of becoming familiar with the collected data, coding the data, relating the encoded data to the central research question, and underlying sub-questions, searching for concepts and associated aspects, interpreting relationships, and refining and testing the propositions [58]. The transcriptions of the interviews and observations and the documents were encoded based on a coding scheme. The coding was carried out in three steps. The first step involved open coding by providing the data with specific labels (open codes). The second step was axial coding, which analyzed whether there were relationships between the specific labels. The identified relationships were then grouped and provided with an overarching label. The third step involved selective coding. During this step, we analyzed whether the overarching labels and subcategories could be related to the other labels and categories. With ‘pattern matching’, the patterns of the different concepts and underlying aspects were matched and compared with the patterns that were expected in the conceptual model [58]. The software program ATLAS.ti was used to analyze and encode the data.

4. Results

To answer our research question (how does the corona crisis affects sustainability-oriented innovation, sustainable entrepreneurial orientation, absorptive capacity, and the relationship between these concepts in the financial sector?), we first investigated how the corona crisis affects the individual concepts. Then, we investigated how the corona crisis affects the relationship between these concepts. Based on the results, each section concluded with the proposition.

4.1. Influence of the Corona Crisis on Sustainability-Oriented Innovation

How does the corona crisis influence sustainability-oriented innovation, e.g., the sustainable innovation of products/services, processes and the organization and the creation of economic, environmental, and social value? Respondents were asked how the corona crisis affects sustainable innovation, sustainable value creation, and what has changed compared to the situation before the corona crisis. The results show that the corona crisis had an impact on economic value creation. The sustainability-oriented innovation realized during the corona crisis led to substantially lower losses and a reduction in costs. Additionally, social value was created; namely, the innovations helped costumers with (payment) problems in such a way that they can remain in their houses. This is illustrated by the following quotes: “What I see is that the focus on sustainable innovation and on economic, social, and environmental aspects has increased…” (1:5), and: “Because of the way we can now help our customers who have payment problems, customers don’t just have to leave their homes. We mainly create social value with this. But also, economically. Our losses have been substantially reduced” (5:15). When asked how sustainable value has been created with these sustainable innovations, it appears that the realized value mainly relates to economic and social value, and to a lesser extent to environmental value. This is illustrated by the following quotes: “With these innovations we have created economic value. We have reduced our costs. But I also think that with these innovations we have provided more convenience for clients and advisors. And with that, we have also created social value” (21:54), and: “With these innovations we save costs and for customers it becomes easier. And because everything has become much more digital, much less paper is used” (20:12). The use of resources has been reduced, which seems to have a positive effect on the environment.

How the corona crisis has affected the aspects of product/service, process, and organization is illustrated by the following quotes: “What we have done during the corona crisis is to organize our processes and services more sharply for customers with payment problems. Because of these adjustments, we are already talking to customers before they even get into trouble” (5:1), and: “We now deal with our customers in a very different way. In particular when it comes to customers who are in payment problems due to the corona crisis. We have now come up with all kinds of solutions in our processes and services for this” (1:25). Other respondents gave a similar answer: “For example, self-service for customers and advisors, digitizing our processes and services. We have gone even further with this during the corona crisis. This saves us a lot of hours, and therefore also costs. In the end, customers benefit from this too” (2:29). These results imply that the case organization has sustainably innovated a large part of its products and services, organization, and processes as a result of the corona crisis.

The results from the analyses of the interviews and observations are predominantly in line with the results of the document analysis. The codes of economic value creation, product/service, social value creation, and environmental value creation are more often assigned to the quotations of the documents from the period during the corona crisis (year: 2020) than to the quotations of the documents from the period before the corona crisis (year: 2018–2019).

The case integrates innovation opportunities to sustainably innovate products/services and to realize predominantly economic and social value. The results also seem to indicate that the corona crisis had a lesser effect on the sustainable innovation of processes and the organization, and to a very limited extent, the corona crisis had an impact on the creation of environmental value. These results lead to the following proposition:

Proposition 1.

Sustainability-oriented innovation seem to be positively influenced by the corona crisis in the financial sector. The corona crisis has led to an increased awareness of the importance of sustainable innovation, and thus to an increase in sustainability-oriented innovation. As a result of the corona crisis, the realization of sustainable innovation mainly related to the sustainable innovation of products/services and the creation of economic value and social value.

4.2. Influence of the Corona Crisis on Sustainable Entrepreneurial Orientation

How does the corona crisis influence the integral orientation towards sustainability and entrepreneurship? Respondents were asked how the proactivity, innovativeness, and risk appetite has been affected by the corona crisis and what has changed compared to the situation before the corona crisis. On how proactivity and innovativeness is affected by the corona crisis, respondents indicate that these aspects have increased. This is illustrated by the following quote: “We have become much more proactive. I absolutely think so! But I want to say that it was also partly triggered by the increased cost pressure” (22:25). Another respondent gives a similar answer: “The proactivity has become higher. But we also had no other choice. Some things just had to be done. For example, customers who have gotten into payment problems. You have to think of something for that” (21:39). This increase in proactivity and innovation is evident from the extent to which the case organization is looking for new opportunities and possibilities, and the extent to which the case organization experiments with creative solutions to realize sustainability-oriented innovation: “We have realized more sustainable innovations during this crisis. Source access for our customer processes, for example. Customers can now identify much more with apps” (20:2), and: “The situation has totally changed. This has led to people becoming much more creative and experimental. For example, we had to think about how a customer can sign their mortgage offer or deed remotely. We now have several solutions for this, for example digital signing” (20:6). A few respondents, however, nuance the increase in proactivity and innovativeness by putting it in context. They mention that proactivity and innovation is increased due to an increase in cost pressure, social pressure on sustainability, and market demands. “…the internal and external pressure on sustainability is increasing. For example, on the side of our investors. They argue that everything must be more sustainable, but at the same time it should not cost money. And customers, well, they actually say exactly the same thing. So, we’re constantly looking for solutions that work on both sides, and that’s challenging…” (5:3). Another respondent gives a similar answer: “We respond to market demand. And due to the corona crisis, the demand for sustainable solutions has increased. We translate this development into our services and products” (20:2).

How risk appetite is affected by the corona crisis is illustrated by the following quotes: “The willingness to take risks has become much lower. But here too, the sharpened cost focus plays a significant role…” (4:8), and: “I see that the risk appetite has really decreased. This strikes me especially during meetings and the coordination moments on innovation policy proposals. People have become much more reticent” (21:44). The results from the analyses of the interviews and observations correspond to the results of the document analysis. The aspects of innovativeness, proactivity, and risk appetite have been more often assigned to the quotations of the documents from the period during the corona crisis (year: 2020) than to the quotations of the documents from the period before the corona crisis (year: 2018–2019).

These results imply that the case organization is less willing to do something new and unknown in an uncertain and complex environment because of the corona crisis. However, despite the decreased risk appetite, the corona crisis has also led to a more active search for new opportunities and possibilities and an increase in the extent to which the case organization experiments with creative solutions. These results lead to the following proposition:

Proposition 2.

Sustainable entrepreneurial orientation seems to be influenced by the corona crisis in the financial sector, as the degree of proactivity, innovativeness, and risk appetite has changed. The corona crisis has led to an increase in the extent to which the organization actively searches for new opportunities and possibilities (proactivity) and experiments with creative solutions (innovativeness), but to a decrease in the willingness to do something unknown in an uncertain and a complex environment (risk appetite). Given the effect of the corona crisis on sustainable entrepreneurial orientation, sustainable innovation seems to be positively influenced.

4.3. Influence of the Corona Crisis on Absorptive Capacity

How is absorptive capacity affected by the corona crisis? Thus, how does the corona crisis influence knowledge adaptation, knowledge acquisition, knowledge exploitation, and knowledge transformation? Respondents were asked how the learning capacity and the development of knowledge and information was affected by the corona crisis, and what has changed compared to the situation before the corona crisis. The results show that the corona crisis affects the extent to which the case organization identifies and obtains knowledge, analyses, and tries to understand knowledge, and combines existing knowledge with new knowledge, with the aim of being able to make the right decision about how the case organization should anticipate the developments and consequences of the corona crisis. This is shown in the following quote: “The development of knowledge and information has really increased. We are constantly looking at the developments surrounding the corona crisis. So that we know if we are still doing the right things and can adjust processes immediately if necessary” (22:32). Another respondent gives a similar answer: “Precisely because there was panic, people started looking for each other a lot more, and knowledge and information was much more shared and combined” (20:18).

The corona crisis influenced knowledge exploitation and transformation to a lesser extent than adaptation and acquisition. The case organization more often applied and used existing and new knowledge during decision-making processes related to the corona crisis and sustainability-oriented innovations. How the corona crisis affected the application and use of existing and new knowledge (knowledge exploitation) is shown by the following quote: “The world around us had suddenly changed. So, we just needed all the information, and still do. As a result, for example, we have become much more fact-based and data-driven” (5:16). In contrast to the results from the semi-structured interviews with senior managers and the observations, during the semi-structured group interviews with employees it was predominantly indicated that the aspects of knowledge exploitation and transformation are affected in a limited way by the corona crisis. This is illustrated by the following quote from an employee: “That hasn’t changed. We just have to comply with certain controls and legal frameworks. And we also needed the knowledge and information about these things before the corona crisis” (21:45). Another respondent gives a similar answer: “Yes, it might sound a bit harsh. But the corona crisis hasn’t changed that. I don’t see any information coming along that I think will really help us” (22:31).

The results from the analyses of the interviews and observations correspond to the results of the document analysis. As a code, the aspects of adapting knowledge, exploiting knowledge, transforming knowledge, and acquiring knowledge have been assigned more often to the quotations of the documents from the period during the corona crisis (year: 2020) than to the quotations of the documents from the period before the corona crisis (year: 2018–2019). Based on the results, it can be concluded that knowledge adaption and knowledge acquisition is increased by the corona crisis, and to a lesser extent knowledge exploitation and knowledge transformation. These results lead to the following proposition:

Proposition 3.

Absorptive capacity seems to be influenced by the corona crisis in the financial sector, as the degree of knowledge adaptation, knowledge acquisition, knowledge transformation, and knowledge exploitation has changed. The corona crisis has led to an increase in the extent to which the organization analyses and understands knowledge (knowledge adaptation), identifies, and obtains knowledge (knowledge acquisition), combines existing and new knowledge (knowledge transformation), and applies and uses existing and new knowledge (knowledge exploitation). Given the influence of the corona crisis on absorptive capacity, there is likely to be a positive influence of the corona crisis on sustainable innovation.

4.4. Influence of the Corona Crisis on the Relationship between Sustainability-Oriented Innovation, Sustainable Entrepreneurial Orientation and Absorptive Capacity

Finally, we analyzed how the corona crisis affects the relationship between sustainability-oriented innovation, sustainable entrepreneurial orientation, and absorptive capacity. Respondents were asked how they characterize and experience the corona crisis, to what extent this specific crisis had an impact on the case organization, and to what extent the corona crisis influenced the degree of uncertainty. Respondents indicate that the corona crisis has led to a higher degree of uncertainty, is characterized as an unexpected event, and has an impact on the case organization. This is illustrated by the following quotes: “…this crisis can turn into a financial crisis, so there is still some uncertainty there” (2:19), and: “People were afraid. Doomsday scenarios were all drawn out” (20:7). Although it has not been shown that the corona crisis has put the continued survival of the case organization under pressure, the increased uncertainty seems to have led to a decrease in risk appetite. This is illustrated by the following quote: “I see that the risk appetite has really decreased. This strikes me especially during meetings and the coordination moments on innovation policy proposals. People have become much more reticent” (21:44). However, the decreased risk appetite does not seem to have a negative impact on sustainability-oriented innovation and the creation of sustainable value as proactivity and innovativeness have increased, which implies that the corona crisis affects the relationship between sustainable entrepreneurial orientation and sustainability-oriented innovation. This is illustrated by the following quotes: “It was expected that the corona crisis would lead to large income losses for customers. This was one of the reasons for us to give substance to sustainable innovation in a different way. And there was no other way. If we do nothing, we will also suffer the negative consequences” (3:26), and: “…due to the corona crisis, the importance [of sustainable innovation] has increased. We are now also using the digital possibilities much more for the sustainable innovation of our services. With this we limit physical documentation, and at the same time we reduce costs. This provides an economic advantage, but also a contribution to the ecological aspect” (1:26). Other respondents gave a similar answer: “The situation has totally changed. This has led to people becoming much more creative and experimental. For example, we had to think about how a customer can sign their mortgage offer or deed remotely. We now have several solutions for this, for example digital signing” (20:6). The corona crisis also appears to affect the relationship between absorptive capacity and sustainability-oriented innovation. As a result of the increased uncertainty, the ability to learn and the development of knowledge and information seems to have increased. This is illustrated by the following quotes: “During the first wave, there was a lot of fear and uncertainty, and a huge urge to analyze everything to pieces. And that’s still there. People prefer not to take risks at the moment” (2:39), and: “Precisely because there was panic, people started looking for each other a lot more, and knowledge and information was much more shared and combined” (20:18). Other respondents gave a similar answer: “We have come to realize the usefulness of knowledge and information much more. The use of external knowledge and information, for example, that has seriously increased. And it has to be. We just need it to be able to make the right decisions” (3:14).

Due to the increased proactivity, innovativeness, and the increased degree to which the case organization adapts, acquires, exploits, and transforms knowledge, the case organization has predominantly sustainably innovated its products/services and mainly created economic and social value. To a lesser extent, the corona crisis has led to the sustainable innovation of processes and the organization, and to a very limited extent to the creation of environmental value. We find that the corona crisis mainly affects the concept of sustainable entrepreneurial orientation and its relationship with sustainable-oriented innovation. The concepts of sustainability-oriented innovation and absorptive capacity seem to be influenced to a slightly lesser extent by the corona crisis. These results lead to the following proposition:

Proposition 4.

The relationship between sustainable entrepreneurial orientation, absorptive capacity, and sustainability-oriented innovation seems to be influenced by the corona crisis in the financial sector. The degree of orientation towards sustainability and entrepreneurship (sustainable entrepreneurial orientation), knowledge and information development (absorptive capacity), and sustainable innovation (sustainability-oriented innovation) has changed, which seems to have a positive influence on sustainable innovations. With the increased degree of proactivity and innovation, knowledge adaption, exploitation, transformation, and acquisition, the organization appears to be able to manage discontinuity (caused by the corona crisis) and successfully realize sustainability-oriented innovation.

5. Discussion

5.1. Discussion of Results

The vast majority of existing studies focus on the effects of the previous financial and economic crises on innovation. These studies indicate that innovation is negatively influenced by a crisis, and assume that crises put pressure on the continued survival of an organization [2,4,61]. They reason that a crisis is accompanied by a decline in economic outcomes, less investment in innovation, and lower productivity [22,23]. In addition, various studies indicate that a crisis also leads to less willingness to innovate, a decrease in the performance of innovation, and fewer innovation activities [6,20,38]. However, we argue that the corona crisis cannot be compared with the previous financial and economic crises because of its economic, social, and environmental influence [12,13,39,40]. Based on the research findings of this exploratory case study, it can be concluded that the effect of the corona crisis on the relationship between sustainability-oriented innovation, sustainable entrepreneurial orientation, and absorptive capacity is different from the effect of the financial and economic crises on these concepts, which may be explained by the differences between the characteristics of the corona crisis and the previous crises.

Contrary to previous studies, our study shows that the corona crisis seems to have had a positive effect on sustainability-oriented innovation. Although the interviews have not clearly proved a direct association between the corona crisis and sustainable innovation, during the interviews it became apparent that as a result of the corona crisis, there has been an increased awareness that sustainable innovation is important to be able to cope with a crisis. The case organization has realized more sustainable innovations during the corona crisis than before. It has integrated innovation opportunities to predominantly innovate products/services sustainably and create economic and social value. The results also seem to indicate that the corona crisis had less effect on the sustainable innovation of processes and the organization, and impacted the creation of environmental value to a very limited extent. The explanation for this effect of the corona crisis on sustainability-oriented innovation may lie in the nature of the case organization and its products/services. After all, the case organization is a financial service provider that offers specific financial products and services to customers, which suggests that the case organization has a particular interest in creating economic and social value for the organization and its customers through the sustainable innovation of its products and services.

Our research has also shown that the uncertainty has increased and that the risk appetite has decreased in the organization because of the corona crisis. Yet, these phenomena apparently did not have a negative effect on the realization of sustainability-oriented innovation and the management of discontinuity, which is an interesting insight. Namely, various studies show that the willingness to undertake something new and unknown (risk appetite) in an uncertain and a complex environment increases when there is discontinuity caused by crises [32,55]. The reason for which the decreased risk appetite (because of the corona crisis) does not seem to have a negative impact on sustainability-oriented innovation is because proactivity, innovativeness and adaptation, acquisition, transformation, and exploitation of knowledge have increased as a result of the corona crisis. These results show that when an organization has a high degree of proactivity and innovativeness, and the ability to develop knowledge and information, an organization can successfully realize sustainable innovations during the corona crisis, which are mainly aimed at creating social and economic value.

Overviewing all interviews, we found that multiple factors were involved in explaining how the financial service provider was able to remain successful in creating social and economic value during the corona crisis. The interviews show that employees in the case organization adapted to the crisis situation and adopted an innovative attitude combined with a determination to help customers and use sustainable ways to do so (see Section 4.1 and Section 4.2). Processes and services were streamlined to effectively help customers during the crisis (Section 4.1). Where some processes were difficult to adapt before, the corona crisis changed the overall mood and creativity in the organization. Suddenly employees felt able to voice their resourcefulness, and the organization acted upon good ideas. Section 4.3 indicated that employees became much more creative and experimental. The corona crisis also urged the case organization to digitize the processes that used to require paper. Employees were working from their home offices and customers were interacting with employees via email. The pressure to get things done regardless forced digibetic employees to become proficient and paper systems to transfer to a digital (and sustainable) alternative (Section 4.3).

5.2. Theoretical Contribution

This exploratory study focused on how the corona crisis influences sustainability-oriented innovation, sustainable entrepreneurial orientation, absorptive capacity, and the relationship between these concepts. Based on the results and findings of this study, this research has provided new, valuable insights and several theoretical contributions to the scientific literature. Firstly, a contribution has been made to the scientific literature on the effect of crises on innovation. This research has shown that the corona crisis seems to have a positive effect on sustainability-oriented innovation, which differs from other types of crises on innovation in general. Moreover, this research has shown that the corona crisis predominantly has a positive effect on sustainable entrepreneurial orientation and absorptive capacity, which positively influences sustainable innovation. Secondly, a contribution has been made to the scientific research on the effect of the corona crisis on innovation. This research has shown that the corona crisis is an extremely unique crisis, and therefore also seems to have a different effect on innovation, in particular on sustainable innovation. Thirdly, a contribution has been made to the scientific research on the effect of crises and discontinuity on (sustainable) innovation within the financial sector. This research has shown that the relationship between sustainable innovation, sustainable entrepreneurial orientation, and absorptive capacity seems to be positively influenced by the corona crisis in the financial sector.

5.3. Limitations and Recommendations for Further Research

This research has several limitations and accordingly formulates recommendations for future research. Firstly, this research was carried out during the corona crisis. At the time of our study, little literature and research was available about the effects of the corona crisis on sustainability-oriented innovation. Further research needs to be conducted into the long-term effect of the sustainability-oriented innovation that was realized during the crisis and how this affects the case organization after the corona crisis. This suggestion for future research is relevant because it can be used to investigate whether the realized sustainability-oriented innovation can actually be qualified as an innovation that is sustainable, e.g., has the sustainable innovation realized at the time of the corona crisis fulfilled a certain need, without compromising the fulfilment of a future need [18,42]?

Secondly, this research was carried out within the financial sector. More research is therefore needed to test the generalizability of our findings. This can be done, for example, by conducting this research at other financial service providers during the corona crisis or by investigating how the corona crisis affects the sustainability of organizations in other sectors.

Thirdly, the case organization where this research was carried out decided in mid-2019 (before the corona crisis) to implement a strategic change process. This process is aimed at changing behavior, improving performance, and sustainably improving capabilities. The plan was to implement this process in mid-2020, however because of the corona crisis, the process was delayed. It can be interesting to conduct further research into the added value of strategic change processes during and after a crisis.

5.4. Practical Implications

This research has several practical implications. Firstly, the results and findings from this research emphasize the importance of the capabilities of sustainable entrepreneurial orientation and absorptive capacity for realizing sustainability-oriented innovation during crises and to manage discontinuity. However, sustainability and sustainability-oriented innovation are complex topics and can be studied from different angles [43], which was also evident during the interviews and observations as respondents gave feedback about these subjects in several ways. Respondents have indicated that the case organizations’ vision on sustainability should be sharper and more explicit; the advice to senior management is therefore to formulate a clear strategic mission and vision on sustainability and sustainable innovation, which the management is committed to and communicates clearly to employees [62].

Secondly, although the corona crisis is a unique and complex crisis and has a major impact [6], this crisis did not seem to put pressure on the continued survival of the case organization. Given the complexity and uniqueness, it is impossible to fully understand the discontinuity caused by the corona crisis and the long-term consequences [3]. Organizations are therefore advised to prevent the possible effects of the corona crisis from being downplayed [63], which disproportionately increases risk appetite [53]. Organizations could consider opting for a ‘corona strategy’ that is aimed at both proactivity and partnership [61]. In terms of Wang et al. [61] a ‘corona strategy’ focused on partnership makes sense as soon as the corona crisis requires different capabilities than is currently the case, and allows an organization to use its own capabilities and, for the capabilities that the organization does not have, the organization can use the capabilities of a partner [61].

5.5. Overall Conclusions

The aim of this qualitative exploratory case-study was to investigate how the corona crisis affects sustainability-oriented innovation, sustainable entrepreneurial orientation, absorptive capacity, and the relationship between these concepts in the financial sector. Based on the findings, several propositions have been made. In summary, it can be concluded that the corona crisis predominantly has a positive effect on sustainability-oriented innovation, sustainable entrepreneurial orientation, and absorptive capacity in the financial sector. The corona crisis can be characterized as a serious and unique crisis event, which has an impact on the case organization and has led to a higher degree of uncertainty. However, the findings show that the corona crisis has also led to an increase in the extent to which the case organization is proactive and innovative, but to a decrease in risk appetite. The findings also show that the corona crisis has led to an increase in knowledge adaption, knowledge acquisition, knowledge transformation, and knowledge exploitation. Despite the higher degree of uncertainty and decreased risk appetite, the case organization was thus able to manage the discontinuity caused by the corona crisis and enabled the organization to realize more sustainable innovations compared to the situation before the corona crisis, whereby the realization of sustainable innovations during the corona crisis was mainly focused on the sustainable innovation of products/services and the creation of economic and social value.