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Review

Factors That Influence Sustainable Innovation in Organizations: A Systematic Literature Review

by
Praveen Kumar Saxena
1,*,
Arumugam Seetharaman
2 and
Girija Shawarikar
2
1
S P Jain School of Global Management, Sydney Campus, Sydney 2141, Australia
2
S P Jain School of Global Management, Singapore Campus, Singapore 119579, Singapore
*
Author to whom correspondence should be addressed.
Sustainability 2024, 16(12), 4978; https://doi.org/10.3390/su16124978
Submission received: 9 April 2024 / Revised: 2 June 2024 / Accepted: 4 June 2024 / Published: 11 June 2024
(This article belongs to the Special Issue Innovation Management and Sustainability)
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Abstract

:
The purpose of this article is to navigate the intricate balance between innovation and sustainability, pinpointing facilitating factors for their harmonious coexistence. It aims to guide firms toward a future where innovation drives progress while safeguarding the planet’s and its inhabitants’ well-being. Synthesizing the existing research, this study explores the impacts of various factors on sustainable innovation performance. The results highlight the positive associations of leadership roles, dynamic capabilities, stakeholder engagement, and social and environmental aspects with the firm’s innovation, providing insights for fostering sustainable innovation practices. This study proposes a framework that illustrates how factors impacting sustainable innovation intersect with theories studied in this article, such as the triple bottom line (TBL) and sustainability development theory (SDT). A systematic literature review (SLR) methodology is adopted to synthesize the knowledge and validate the research outcome to reach a conclusion. It will be beneficial to include sustainability both as a critical strategy for any firm’s growth and as a key part of the academic curriculum to create knowledge that will develop responsible leaders for a sustainable world. Future studies may utilize quantitative methods, like surveys, to empirically validate outcomes, offering numerical insights into factors influencing sustainable innovation within firms and enriching understanding of their impact and relationships.

1. Introduction

Sustainability is the cornerstone of responsible stewardship and offers a pathway toward preserving our planet for future generations. As defined by the United Nations Brundtland Commission, sustainable development involves “meeting the needs of the present without compromising the ability of future generations to meet their own needs” (Our Common Future, 1987). Sustainable innovation entails the creation of novel solutions that address current challenges while preserving resources, enhancing resilience for future generations, and integrating environmental, social, and economic considerations into product development, process improvement, and service delivery [1]. Sustainable innovation becomes an essential ingredient of the boardroom’s discussion [2], fosters creativity and collaboration across sectors, and encourages the adoption of renewable energy sources, waste reduction strategies, and ethical business practices. Sustainability facilitates maintaining an excellent level of innovative culture and drives the growth journey of the organization [3]. Prioritizing long-term sustainability over short-term gains lays the foundation for a more resilient and equitable future, where innovation catalyzes positive global change. The success of any company is considered to witness economic and non-economic gain [4], which is the triple bottom line (TBL) sustainable outcome, i.e., environmental, social, and economic growth [5,6]. The TBL framework, pivotal in assessing how businesses prioritize people and the planet alongside economic development, remains crucial amid sustainability concerns [7], as measures of success and direction for current and future endeavors [8].
Innovation represents the transformative process of conceptualizing, developing, and implementing novel ideas, methods, products, and services that create meaningful change or offer unique solutions. It encompasses creativity, adaptation, and the application of inventive thinking to address challenges, enhance existing processes, and propel progress across diverse fields and industries. Transformative innovation, with a focus on environmental and social reform, inherently leads to economic growth as a byproduct [9], as evidenced by the widespread adoption of electric vehicles by automobile companies [10] and the circular economy business model in European base companies [11]. Innovation is a cutting-edge strategy that can cause the decline of a business to be reversed [12], allowing it to reach new heights and giving it a competitive advantage [13]. The culture of any organization, which is a key attribute of leaders, motivates its employees to provide the firm with a high level of competitiveness [14].
As highlighted in a study conducted by [15], increasing Co2 emissions due to deforestation and the degradation of forests put pressure on firms to increase the carbon credits from USD 10/tCO2 in 2020 to about USD 121/tCO2 in 2025, which will impact their economic health. Hence, sustainable innovation, such as carbon capture and utilization as a feedstock for chemicals and fuel [16,17], advancements in renewable energy by utilizing solar, wind, and biomass [18,19], and circular economy models like the use, recycling, and upcycling of end-of-life products [20], have witnessed exponential growth in recent years to reduce the sustainability liability. These innovations transcend conventional boundaries and offer novel approaches to address environmental challenges while fostering economic growth. Moreover, the surge in collaborative efforts between industries, academia, and governments has cultivated an environment conducive to fostering innovative solutions that achieve sustainability goals. The dynamism of these innovations spurs progress and offers the potential to reshape industries, mitigating any negative environmental impact and steering us toward a more sustainable future. Innovation fosters competitiveness, and when combined with sustainability, it drives firms’ environmental, social, and financial performance and incentivizes them to prioritize sustainability while remaining competitive [21]. Innovation is one way to measure a firm’s competitiveness (Tambade et al., 2019). By focusing on sustainability, innovation has the potential to create a better world in which we can all live, work, and grow.

2. Literature Review

The synergy between sustainable development and organizational innovation has been recognized as a catalyst for enhancing a firm’s performance. A comprehensive review of 22 research papers between 2018 and 2023 considered what factors can impact “sustainable innovation in the organization” and identified the research gaps, guiding the exploration of five independent variables in the literature through frequency distribution, as shown in Figure 1 and described in the subsequent paragraphs. Those are as follows:
a.
Leadership role.
b.
Dynamic capability.
c.
Stakeholder engagement.
d.
Social aspects.
e.
Environmental aspects.
In the context of sustainable innovation, various facets, such as organizational culture, strategic planning, time management, long-term vision, communication strategies, integration efforts, business model design, decision-making processes, governance structures, and strategic positioning, encapsulated under the umbrella “Leadership Role (LR)” have garnered attention in the literature [22,23,24,25,26,27,28,29,30,31]. Hence, the question raised is how LR influences sustainable innovation in the firm. This study seeks to investigate how the leadership role impacts sustainable innovation within organizations.
The literature review identifies “Dynamic Capability (DC)” as the next independent variable, comprising factors such as process and product complexity, knowledge integration and acquisition, competencies, expertise, R&D, and organizational capability [23,25,26,31,32,33,34,35,36]. This review study investigates the influence of dynamic capability on sustainable innovation within organizations to answer the question of how DC impacts sustainable innovation.
The third variable, “Stakeholder Engagement (SE),” encompasses factors like stakeholder pressure, customer demand, competitive intensity, regulation, and industry characteristics [22,23,24,25,30,31,33,37,38]. This study aims to answer how stakeholder engagement influences sustainable innovation within organizations.
The fourth independent variable identified in the gap study is “Social Aspects (SA).” This category encompasses societal needs, satisfaction, capital, networks, pressure, practices, alignment with technology, and behavioral aspects [29,35,38,39,40,41]. The study aimed to explore and answer how these social aspects influence sustainable innovation within organizations.
The study also considered “Environmental Aspects (EA)” as the fifth independent variable. This includes eco and green innovation, environmental requirements and issues, and the concept of a circular economy, which involves aspects like managing end-of-life products [22,30,36,38,42,43]. The aim is to understand and answer the question of how environmental aspects affect sustainable innovation within organizations.
The literature review identifies five independent variables (LR, DC, SE, SA, and EA) for the research. The dependent variable is “Factors that Influence Sustainable Innovation in the Organization”, and the outcome measures are (1) vision and commitment, (2) adaptability, (3) participation, (4) well-being, and (5) efficiency, as briefed in the methodology section along with each independent variable. TBL theory and sustainable development theory are included in the study and compiled in the theoretical and practical implementation sections.
A visual representation of the research framework is given in Figure 2.
Each variable underwent rigorous examination through a systematic literature review methodology. The findings are summarized and discussed in the subsequent sections, providing insights into the relationship between sustainable innovation and a firm’s performance.

3. Methodology

In the previous research summary of 22 articles between 2018 and 2023, gaps were identified to determine the 5 most frequent repetitive variables as independent variables mentioned in the literature review. The methodology used in these 22 articles was predominantly survey-based, with 55% (12 articles) employing quantitative surveys, while the remaining 45% utilized case studies (2 articles), action research (1 article), and reviews (7 articles). Refer to Table A1 in the Appendix A. The journals were also carefully selected to maintain the quality in finding the research gaps. A total of 95% (21) of the articles belong to sustainability and ABDC journals, and 5% (1) were found from Google Scholar, which is shown as “No” in Figure 3a.
The 22 articles used mixed methodologies. A total of 13 articles (59%) used quantitative methods; all are survey/SEM, and 9 (41%) selected qualitative methods, such as analysis (6) and case/action/Delphi (3). Figure 3b describes how the review considered diversity in selecting articles to find the gap variables.
This literature review has been carried out to understand what has been studied and where there is still a gap for future study. The dependent variable is “Sustainable Innovation”, as it was imperative to recognize the knowledge already available on this topic; a literature review of the secondary data has been carried out by searching articles. Articles from ABDC, Scopus, peer-reviewed journals, and conference papers were searched and selected for this study. Journals and conference papers were reviewed using EBSCO, Web of Science, ProQuest, the SP Jain online library, and Google Scholar. Articles/papers published in journals or presented at conferences, as well as data from government sites, were all included in the study. The study used literature from 2017 to 2024 on the topic “Factors that Influence Sustainable Innovation in Organizations”. A number of keywords were searched in the journals to discover relevant articles, including “Sustainability and Innovation”, “Sustainable Innovation and Firm Performance”, “Leadership Role and Sustainability Innovation”, “Dynamic Capability and Sustainability Innovation”, “Stakeholder Engagement and Sustainability Innovation”, “Social Aspect and Sustainability Innovation”, “Environmental Aspect and Sustainability Innovation”, “Commitment and Leadership Role”, “Adaptability and Dynamic Capability”, “Participation and Stakeholder Engagement”, “Well-being and Social Aspect”, and “Efficiency and Environmental Aspect”.
As mentioned in Figure 4, 108 quality articles were selected for the literature review. These articles were selected carefully, including the latest research on synthesizing knowledge. Articles represent most of the years (2018–2022), 61% (66), and the latest (2023–2024), 31% (34), as mentioned in Figure 5. This has given a thorough availability of knowledge for the systematic literature review, discussion, and conclusion.
This section describes each independent variable and its relation with the dependent variable, outcome measures, and links with the theories as shown in the research framework (Figure 2).

3.1. Leadership Role

A leader is someone who develops a team and directs and motivates its members toward achieving a shared or individual goal. It is the job of those in an LR to provide resources and motivate members within an organization to take on a higher level of responsibility and ownership toward the development and execution of sustainability strategies. Sustainability constraints offer a greater chance of innovation and are subject to the paradoxical mindset of the leaders in an organization [33]. Leadership in a transformational role fosters learning and growth among employees, which enhances interest in any organizational and environmental sustainability activities. Transformational leadership limits the amount of work stress faced by employees and results in greater commitment and engagement [44]. Good leadership predicts creativity and innovation [45] and impacts the culture of innovation within a firm [46] by empowering employees and fostering intrinsic motivation [47]. This underscores the need for a compelling vision of leaders who integrate environmental sustainability, societal benefits, and business viability [48]. The role of a transformational leader is crucial to encouraging sustainable innovation within a firm [49]. Transformational leaders are more adept at fostering employee trust and boosting commitment to sustainable innovation than transactional leaders [50]. Transformational leadership influences followers’ innovative behavior by enhancing their commitment to change, and this relationship enhances innovation in the firm [51]. Hence, “Vision and Commitment” is considered an outcome measure for studying the organization’s leadership role in sustainable innovation.

3.2. Dynamic Capabilities

The authors of [52] defined DCs as a combination of two words: (1) dynamic, which reflects the rapidly changing environmental needs necessary for a business to continue, and (2) capabilities, i.e., the constructing, reconfiguring and integrating of internal and external skills to enhance resources in order to ensure that a business remains competitive within the ever-changing environment in which it finds itself. In simpler words, Winter (2003) states that capabilities add value to the changing environment to gain a newness for competency, referred to as dynamic. There are various types of capabilities: (1) ordinary capabilities, which work for monotonous operations, like governance and administration; (2) semi-dynamic capabilities, which work for activities such as merger and acquisition (M&A), alliances, and product and process development; and (3) rich, dynamic capabilities, including the ability to read future trends, which enhances a firm’s sensing, seizing, and transformational skills (Teece, 2023). Over time, it is essential for an innovative business to develop and expand strategies for developing dynamic capabilities, such as adopting, growing, and transforming [53]. A study conducted by [54] emphasizes the crucial role of external integrative capabilities while cautioning about potential limitations that arise from high internal integration regarding environmental performance. In this fast-changing business world, where a product’s lifecycle is squeezed and it is necessary to think ahead to maintain a competitive advantage, dynamic capabilities have become mandatory for success and sustainability and are measured by adaptability [55] (p. 134). Dynamic capabilities enhance adaptability and improve competitive advantage [56].

3.3. Stakeholder Engagement

SE is a process that is adopted by an organization to connect with its internal and external stakeholders, which enables it to give information and collect ideas or demands that will enhance value for both of them [57] and help it gain a first-mover advantage in offering new products and services or solutions to existing and future issues. As there are a number of opportunities and risks involved with the ongoing demand for a sustainable world, sustainability requires moving forward and growing with the support and commitment of stakeholders. Any organization needs to talk and communicate with stakeholders to discover their requirements if they are to find the best way to use sustainability aspects for growth [58]. Various stakeholders, such as customers, universities, and NGOs, can positively influence economic innovation and sustainability [59,60]. Open innovation is positively associated with a firm’s economic innovation and environmental sustainability performance [28]. It facilitates the process of rethinking the business model from a linear to a circular economy through a cultural shift in the firm (Salvioni & Almici, 2020) [61]. SE promotes cultural transformation for specific principles, enhances proactive inclusion and integrated approaches, and has a positive impact on sustainability [62].
Engaging stakeholders fosters participation, enriches knowledge, and provides valuable advice to drive innovation [63]. The extensive systematic literature review makes evident that stakeholder engagement leads to innovation performance through increased participation.

3.4. Social Aspects

The SA of sustainability determines whether it has a positive or negative effect on individuals. The SA can play a crucial role in improving the lives of individuals by providing good jobs, a better atmosphere and culture in the workplace, and environmental enhancements that offer a better quality of life. Social innovations, defined as the effective utilization of novel concepts to address societal challenges and requirements, play a vital role in both the social and economic spheres of life [64]. It is necessary to give equal weight to all three elements of a business’s sustainability: economic, environmental, and social. The previous research from Souza and Alves also explains how the synergy of an organization’s internal management system (regarding its quality, environment, occupational health and safety, and social responsibility) and its lean management system can improve its sustainability (economic, environmental, and social) [29]. Social integration creates a healthy work environment that enables employee empowerment, training, autonomous groups, bottom-up, and flexibility, which significantly impacts the firm’s technical integration and enhances its quality and sustainability performance [39]. It is a firm’s social focus, not its business, that has the biggest effect on its social innovation. Social innovation leads to potential disruptive innovation instead of only systematic innovation [65] and enhances firm performance.
The social aspects directly impact human well-being [66]. Workers’ well-being carries implications for society and families and enhances the firm’s performance [67]. Thus, well-being is considered an outcome of SA, which impacts the firm’s sustainable innovation performance.

3.5. Environmental Aspects

The EA of sustainability is a well-accepted and attentive objective that needs immediate action to mend and restore the depletion of nature for growth across the world. The effects of global warming, CO2 emissions, and greenhouse gases are well known and have been the topic of much research and innovation. The previous study [30] reveals that environmental regulations can hurt a firm’s performance, especially in a short period; however, by sequentially enhancing environmental commitments and implementing sustainable innovation, a firm’s performance and environmental quality improve in the long run. Thus, sustainability and a firm’s performance have a contradictory, mixed relationship: in some cases, environmental sustainability enhances a firm’s performance, while in others, economic performance declines, and hence it is essential to improve efficiency [68]. Sustainability, as a source of creativity when connected with innovation, provides a solid and undisputed base that can be used to sustain and expand a firm’s performance [25].
Incremental innovation, or Total Quality Management (TQM), foster internal efforts toward sustainability management, potentially impacting overall performance [34]. A strong culture of knowledge management within a firm allows both the sharing of knowledge and the application of knowledge in a way that considers the EA of product development and innovation [36]. Green training is an influential positive factor of sustainability that may be included in any business strategy [69]. Pro-environment knowledge and psychological capital moderate and mediate significantly between the practice of green human resource management and pro-environmental behavior in employees [70]. Open learning and technological transfer also enhance a firm’s green innovation [71,72] and significantly impact its financial performance (Jum’a et al., 2021) [73].
The interplay between environmental aspects, sustainability initiatives, and innovation paradigms is becoming pivotal in shaping organizational strategies and societal progress. Asadi et al. explain the integration of environmental consciousness into innovation processes has become instrumental, leading to the emergence of eco-innovations and sustainable technologies [74]. This fusion sparks a synergy where innovation is harnessed for market competitiveness and addresses pressing environmental challenges. The efficiency increase or decrease is an outcome measure of environmental aspects [75].

3.6. Triple Bottom-Up Theory

The TBL theory proposed by Elkington (1997) emphasizes an organization’s responsibility to consider three dimensions—social, environmental, and economic—and to measure success not solely by its financial performance but also by its social equity and environmental impact. While this concept addresses people, the planet, and profits, it faces criticism for not encompassing the entire sustainability concept, urging the inclusion of engineering, technology, and operations [76]. Challenging companies that prioritize profits over people and the planet in a way that leads to trade-offs rather than the development of a harmonious balance [77]. Academia continues to view the TBL positively: a number of discussions in 2017 and 2018 considered it to be a relevant approach for sustainable development, despite its misuse in practice [77]. TBL developed a new approach that focuses on innovation for social justice, environmental aspects, and the control of poverty through economic sustainability [78]. Hence, in this study, TBL is reviewed within the context of sustainability.

3.7. Sustainable Development Theory

Sustainable development theory advocates for meeting present needs without compromising the ability of future generations to meet their needs, aiming for a balance between economic growth, social equity, and environmental protection. Despite persistent definitional ambiguity, there has been a gradual resolution through the adoption of a global and local consensus on goals and targets that emphasize meeting human needs while preserving the planet’s life support systems [79]. There are a number of Sustainable Development Goals (SDGs) that represent the SA (SDG 1, 3, 4, 5, 11, and 16), the EA (SDG 2, 6, 7, 13, 14, and 15), the LR via governance (SDG 17), and SE through enhancing economic sustainability (SDG 8, 9, 10, and 12) [80]. While it is an evolving concept within scientific research and environmental management, it is one that is growing in importance and applicability compared to the more contested notion of sustainable development [81]. Sustainability development theory was included in the study to shed insight into the significance of this theory in the current scenario.

3.8. Econometric Model as a Future Work

Following the econometric model of sustainable innovation, a dependent variable in this study is the function of the research gaps or independent variables, LR, DC, SE, SA, and EA. These research gaps, identified from the literature review, serve as the key drivers in understanding the relationship between sustainable innovation and a firm’s performance.
Sustainable innovation = f (LR, DC, SE, SA, EA).
The equation is to be estimated as follows:
β0 + β1LR + β2DC + β3SE + β4SA + β5EA
β0 is the intercept/constant; it means the quantum of sustainable innovation in the absence of LR, DC, SE, SA, and EA.
β1 is the change in sustainable innovation per one unit change in the LR.
β2 is the change in sustainable innovation per one unit change in the DC.
β3 is the change in sustainable innovation per one unit change in the SE.
β4 is the change in sustainable innovation per one unit change in the SA.
β5 is the change in sustainable innovation per one unit change in the EA.
The above model can be developed and validated after collecting data for my future research.
The discussion and proposition section utilizes all studied variables and theories above, concluding their impact on sustainable innovation. The findings were analyzed and articulated to develop and enhance the knowledge and understanding of factors that impact a firm’s sustainability and innovative performance.

4. Discussion and Proposition

4.1. Leadership Role

4.1.1. Discussion

One aim of this study is to find out the relationship between leadership roles and sustainable innovation in organizations. In the methodology section, through the literature review, it is evident that the leadership role is in the modern, dynamic business world, where the lifecycle of products and services is getting shorter and requires a clear vision and commitment to proactively sense change, seize the required capability [82], and transform an organization’s direction entirely or partially to meet the demand and keep a competitive edge if it is to sustain and grow. Green transformational leadership significantly influences green work engagement and green task performance, showcasing its positive impact on guiding employees’ commitment toward environmentally responsible behaviors and resisting harmful organizational practices [44]; it is also positively associated with innovation [83]. A suitable leadership role is necessary to motivate employees and provide the infrastructure to run quality management and innovation within a firm (Bouranta, 2020) to ensure sustainable performance. Positive leadership positively impacts creativity and innovation, while negative leadership results in a downward trend [45]. Leadership that enhances knowledge management, including the sharing of tacit and explicit knowledge among employees, positively impacts creativity and innovation in the organization [83] and provides high competitiveness for the firm’s performance [84]. Hwang et al. (2017) found a positive relationship between transformational leadership and organizational commitment, with mediation by a shared vision and team goal commitment. A similar study by (Keskes et al., 2018) found that transformational leadership fosters affective commitment and is more effective if aligned with top management strategies [85]. Therefore, it is clear that there is a strong connection between leadership, sustainable innovation, vision, and commitment, all of which contribute to enhanced performance.

4.1.2. Proposition 1

The leadership role significantly enhances sustainable innovation within a firm, bringing clear vision and commitment.

4.2. Dynamic Capability

4.2.1. Discussion

DC involves enhancing capabilities within the dynamic business environment, as no business is sustainable if it does not match the pace of the fast-changing world. Sustainability requires many dynamic changes, and innovation is a critical strategy that requires an upgraded capability to explore or discover new products or to bring added value to existing products, processes, and services. Internal intrinsic motivation and knowledge (capability) are crucial to achieving sustainable innovation within a firm [86]. Dynamic capabilities in all business streams (e.g., IT-related dynamic capabilities) positively influence a sustainable innovative drive, which enhances a firm’s performance, even in a turbulent environment (Ilmudeen et al., 2020; Teece et al., 2016) [87,88]. Dynamic capabilities, comprising absorption, innovation, and adaptation, lead to improved sustainable performance [89]. Dynamic capabilities have a positive effect on the firm’s adaptability [90] and enhance sustainable innovation in the organization.

4.2.2. Proposition 2

DCs significantly enhance an organization’s adaptability for sustainable innovation.

4.3. Stakeholder Engagement

4.3.1. Discussion

SE is a process that organizations follow to comply with rules/regulations and to hear the voice of, align with, or communicate with their existing and future stakeholders [91]. Organizations must proactively engage with stakeholders to foster connections, trust, confidence, and buy-in for the firm’s important initiatives, including innovation, and to mitigate potential risks and conflicts that could affect the firm’s performance.
Sustainability puts pressure on an organization to strive for innovation in products and processes to comply with and consider the regulations/requests of various stakeholders [26]. SE, in the form of pressure and any related follow-up, stimulates a culture of sustainable innovation within a firm to ensure that its products and processes comply with all rules and regulations [26]. SE influences all forms of sustainability (i.e., economic, social, and environmental) (Salvioni & Almici, 2020) [62], and better SE for any sustainable project is positively associated with participation [92], as it enhances the acceptance of sustainable innovation, is strongly connected with employees’ conduct and participation, and improves the firm’s performance [93]. Leaders should focus on stakeholder engagement and integrate their suggestions through participation in green initiatives to enhance sustainable competitiveness [57].

4.3.2. Proposition 3

SE is significantly associated with sustainable innovation and enhances participation.

4.4. Social Aspect

4.4.1. Discussion

Shojiro Ishibashi, founder of the Bridgestone Corporation in Japan, embedded business philosophy when he said the following: “I am convinced that a simple profit-seeking business will never thrive, but a business that contributes to its society and country will be forever profitable” (Bridgestone’s Sustainability Journey|Sustainability) [94]. The SA role in innovation has grown a lot in the last two decades [95], and the integration of socio-technical factors provides a close association with a firm’s sustainability [39]. The previous research carried out by Deleryd and Fundin emphasizes that a firm’s performance is not evaluated solely on customer satisfaction but rather on how the SA considers social value, including the firm’s social responsibility [40]. The Index of Social Aspects assesses society’s ability to meet basic human needs and enhance the quality of life or social well-being [96]. The SA of innovation, as per the European Commission, addresses well-being through societal needs, fosters relationships, and encourages novel collaborations for effective solutions [97]. Trust, which is a part of social aspects, increases when the well-being of employees is taken care of in the firm [98].

4.4.2. Proposition 4

The SA significantly enhances a firm’s sustainable innovation performance and raises the well-being of its employees.

4.5. Environmental Aspect

4.5.1. Discussion

The EA is an integral part of sustainability. In the short term, environmental regulations can hinder a firm’s performance; however, by addressing environmental commitments in any of its strategies, a firm can develop sustainable innovation and enhance its performance [30]. Sustainability, including the EA, is a source of creativity when connected with innovation, and it provides a solid and undisputed base to sustain and expand a firm’s performance [25]. The circular economy is a part of the EA that works to reduce, reuse, and recycle; it enhances the creativity and thought processes needed to reduce waste from operations and to use waste or recycle it for reuse, thus creating a culture of sustainability and innovation and increasing the firm’s performance [42]. The alignment of innovative practices with environmental sustainability fosters resource efficiency and drives ecological preservation and resilience in the face of global environmental concerns. The EA may not constantly improve efficiency through innovation performance [99]; however, many studies, such as that of Aguado et al. (2013), have concluded that the EA of sustainable innovation does foster efficiency within firms [100]. It has also been noted that the EA in innovation can enhance a firm’s performance through improved efficiency or productivity [101,102]. A similar conclusion was drawn in the study conducted by [103] that environmental considerations when using technology can be economically beneficial, enhance efficiency, and demonstrate sustainable innovation, including competitiveness.

4.5.2. Proposition 5

The EA is positively associated with sustainable innovation and can enhance a firm’s performance and boost its efficiency.

5. Theoretical Contribution and Practical Implications

This research has been carried out by undertaking a qualitative, systematic literature review. In it, a number of articles relating to the elements of sustainability that play a significant role in enhancing a culture of innovation within firms have been identified and studied. A research framework has been prepared, and the relationship between the independent and dependent variables, linked with the outcome measures and theories, has been considered. This study has examined the critical enablers of sustainability (LR, DC, SE, SA, and EA) that enhance sustainability and produce innovative outcomes, vision and commitment, adaptability, participation, well-being, and efficiency within a firm.
TBL: This research shows that the TBL theory is significantly associated with the current business environment and that the EA and SA are significantly associated with the sustainability and innovation required for a firm’s growth. This justifies the TBL, which advocates that it is not only profit but the effects on people and the planet that are crucial for businesses. The study matches the conclusion of previous research, which argues that TBL is a framework that considers not only economic but also environmental and social aspects in evaluating organizational performance [38,104,105].
Sustainable development theory: In this research, various elements have been examined that enhance the sustainable and innovative performance of a firm, validating the idea that the goals of sustainable development (such as those related to social and environmental sustainability), in addition to the views of stakeholders, capabilities, and leadership, must be part of any strategy if a firm is to maintain continuous growth. As the earlier research paper of [106] concludes, business growth (SDG 6) now focuses on environmental (SDG 6, 14, and 15) and social aspects (SDG 1 and 2), and innovation plays a crucial role in enhancing the interest and ease of the adoption of SDGs. In a similar manner, this research confirms that businesses are enhancing their focus on the adoption of the SDGs.
The outcome of the research is beneficial in the following ways:
a.
As mentioned above, in the business world, these factors can be included in the development of strategies to strengthen them for significant application in the development of sustainability.
b.
In the academic world, these factors can be included in the curriculum to teach students their importance and to encourage students to use them during their professional careers and/or while exploring new knowledge.

6. Management Implication

Sustainability offers a competitive advantage for any business, giving it an edge and motivating it to continue to grow and satisfy customer needs by adding value to products, processes, and services. Sustainability is no longer a choice, and it must be included in strategies if a business is to survive and grow. Stakeholders will not accept innovation if sustainability has not been included as a factor, and managers must include various factors of sustainability, such as leadership in providing vision and commitment, the capability to adapt or transform, engagement that allows participation, and the consideration of social aspects that put people first and environmental aspects that save the planet and improved efficiency performance for a more extended period. Hence, it is essential to include sustainable innovation in the organization for sustainable growth.

7. Limitations and Scope of Future Research

This research has been conducted using secondary data available on various platforms, such as Google Scholar, EBSCO, Web of Science, and ProQuest, and with the support of the SP Jain Library between 2017 and 2024. However, this data may be outdated, and the outcome may not match current requirements, as sustainability and innovation are dynamic areas.
The research methodology involved a systematic literature review with limited articles, and a change in methodology could produce a different outcome.
The research was limited to five independent variables discovered through the frequency distribution of research gap variables. There is a chance that this study missed a few critical variables.
Future research could adopt a different methodology by using quantitative data from primary sources to avoid the risk of outdated data. After collecting data from my research, an econometric model described in the methodology section can be developed and validated in future studies. It could also consider new variables, such as employee morale, economic aspects, governance, government support, and technology, which could be added to any future study.

8. Conclusions

This study aims to employ a systematic review methodology to synthesize practical insights or factors on sustainable innovation within the organization. Sustainability must be a top strategy for any business if it is to survive and drive growth. Sustainability leads to innovation, strategically positions an organization one step ahead of the competitor, and allows an organization to secure the first move or competitive advantage; thus, it must be a prime focus for all business and non-business ecosystems. Sustainable innovation flourishes by putting effort into environmental, social, and strategic ways of leadership, engagement, and capability to demonstrate the new vision and direction [107].
The literature described in the literature review, methodology, and discussion section recognizes that the LR must consider sustainability when developing the learning infrastructure, sharing and transforming processes, products, and services, and enhancing innovation; this is essential to ensuring a future vision and commitment that leads to sustainable innovation and enhanced firm performance.
The available literature clearly demonstrates that the DC is essential to innovating processes, products, services, and business models to ensure sustainable performance. The sustainability of the economy and environmental and social needs requires innovation, and innovation, in turn, enhances sustainability to ensure a better future life and to help businesses by giving them a competitive advantage.
Previous research makes it clear that organizations must keep communicating with stakeholders (internal and external) if the firm is to receive supportive engagement that allows it to innovate for the sustainability and transformation of its business. It is also evident that the participation of stakeholders has a positive influence on the sustainability of the economy, environment, and society. By keeping stakeholders engaged in the strategy, new ideas can emerge that stimulate the firm’s innovation and its drive for sustainability performance.
An organization’s social dimension brings its employees well-being, such as happiness, satisfaction, and motivation. It also results in participation in new processes, products, and services. Sustainability focuses on economic, environmental, and social elements, so considering the SA is critical to developing an organization’s performance. Integrating the SA provides a sustainable innovation culture within an organization and enhances its sustainability.
Environmental knowledge and commitment play a vital role in understanding an organization’s EA. Such awareness and motivation produce ideas that help enhance sustainability and boost an organization’s innovation culture. This study has demonstrated that, in the long term, keeping the EA as a focus within strategies can sustain and improve a firm’s efficiency and performance.
The government, business world, NGOs, service sectors, and other organizations all emphasize the promotion of sustainability, and the UN has defined 17 SDGs that have been accepted by all member countries. This research concludes that sustainability through the LR, DC, SE, SA, and EA provides the ability to innovate without depletion of natural or physical resources. Furthermore, this study suggests that these elements can stimulate innovation with sustainability to give firms a competitive advantage and ensure strong performance through clear vision and commitment, adaptivity, participation, well-being, and high efficiency.

Funding

This research received no external funding.

Conflicts of Interest

The authors declare no conflict of interest.

Appendix A

Table A1. Summary of gap variables.
Table A1. Summary of gap variables.
NoArticle TitleAuthorJournalRef.MethodologyRatingFuture ScopeGap VariablesGap Variable
(Summary)
1Environmental regulation, environmental commitment, sustainability exploration/exploitation innovation, and firm sustainable development. 11(21), 6001.Xing, X., Liu, T., Wang, J., Shen, L., & Zhu, Y. (2019).Sustainability[30]Quantitative/SEM/SurveySustainabilityThis paper focuses on two types of environmental innovation—sustainability exploration and sustainability exploitation—and their mediating effects. Future research should incorporate other innovations, such as eco-innovation, open innovation, and green innovation, within frameworks related to the Porter hypothesis. (Sus A-1)Green InnovationEnvironmental aspect
Open InnovationOpen Innovation
Second, this paper includes only environmental commitment in its conceptual framework to study its mediating effect. However, factors like stakeholder pressure, strategic position, and customer demand also play a crucial role in driving proactive environmental protection and innovation (Sus A-1).Stakeholder pressureStakeholder engagement
Strategic position
Customer demand
Third, this paper overlooks the impact of various environmental regulations on different technology innovations. Future research should address this to support the “strong” Porter Hypothesis (Sus A-1).“Strong” Porter HypothesisLeadership role
2The influence of management innovation and technological Innovation on organization performance. A mediating role of Sustainability. 11(2), 495.Zhang, Y., Khan, U., Lee, S., & Salik, M. (2019).Sustainability[31]Structural Equation Model (SEM)/Analysis of moment structures (AMOS)SustainabilityOur review focuses solely on significant innovations (e.g., MI and TI). However, other types like process, product, organization, and marketing innovations also impact organizational sustainability and performance. Further research is needed to conceptualize and examine these influences (Sus A-2).Process InnovationProcess Innovation
Product InnovationProduct Innovation
Organization InnovationOrganization Innovation
Marketing InnovationMarketing Innovation
We used only six dimensions to measure organizational performance. Future studies should consider additional dimensions, such as non-financial, economic, and customer performance, to provide a more comprehensive understanding and better articulation of the results (Sus A-2).Non-financial performanceNon-financial performance
Economic performanceEconomic performance
Customer performanceCustomer performance
Management and technological innovation may require substantial financial capital. To achieve better result, we recommend future research focus on this area (Sus A-2).Financial capitalFinanacial Investment
3Environmental Sustainability as a source of product innovation: the role of governance mechanisms in manufacturing firms. 10(7), 2238.Kim, M. K., Sheu, C., & Yoon, J. (2018).Sustainability[25]Survey/Regression ModelSustainabilityFuture researchers could explore how governance mechanisms in customer-facing firms differ from non-customer-facing ones. Additionally, factors like product/process complexity, stakeholder sustainability pressure, and organizational integration may influence governance and innovation dynamics, warranting further examination (Sus A-3).GovernanceGovernance
Product complexityProduct complexity
Process ComplexityProcess Complexity
Stakeholders’ sustainability pressureStakeholder engagement
Organizational integrationLeadership role
4Utilities: Innovation and Sustainability. 11(4), 1085.Loredo, E., Lopez-Mielgo, N., Pineiro-Villaverde, G., & García-Álvarez, M. T. (2019).Sustainability[26]Survey/Regression ModelSustainabilityThis paper focuses on product and process innovation. Future research could explore marketing, organizational, and business model innovations (Sus A-4).Marketing InnovationMarketing Innovation
Organization InnovationOrganization Innovation
Business model innovationBusiness model innovation
External factors like subsidies and support mechanisms, which impact innovation willingness, were overlooked. Incorporating them in future study could enrich results (Sus A-4).SubsidiesStakeholder engagement
Support mechanisms
Despite traditional monopolistic cultures, utilities are now embracing open innovation. Many large utilities actively engage in external corporate venturing, seeking ideas and startups to complement their knowledge portfolio (Sus A-4).StartupsGovernment support
Knowledge portfolioKnowledge strategy
5Twitter analysis of global communication in the field of Sustainability. 11(24), 6958.Pilař, L., Kvasničková Stanislavská, L., Pitrova, J., Krejčí, I., Ticha, I., & Chalupova, M. (2019).Sustainability[27]Database survey/Knowledge Discovery in Databases (KDD) processSustainabilityIn future research, we will use artificial intelligence to predict trends in social network communication (Sus A-5).Artificial intelligencyAI
Future studies should propose decision-making support, develop a dynamic model for large-scale communication design, and create an analytic framework (Sus A-5).Decision-makingDecision-making
Large-scale communicationLarge-scale communication
Analytic frameworkAnalytic framework
6Organizing sustainability competencies through quality management: Integration or specialization. 10(5), 1326.Siva, V., Gremyr, I., & Halldórsson, Á. (2018).Sustainability[36]Case study/semi-structured interviewSustainabilityFuture research could explore and analyze how competencies in product development are co-organized when environmental requirements are introduced at the operational level rather than the strategic level (Sus A-6).Competencies in Product developmentDynamic capability
Environmental requirements at the Operational levelEnvironmental aspect
Another area for future research could involve an in-depth study of organizations that have deliberately adopted multiple knowledge integration strategies and examine the activities that support these strategies (Sus A-6).Knowledge integration strategiesKnowledge strategy
7Towards societal satisfaction in a fifth generation of quality–the sustainability model. 1–17.Deleryd, M., & Fundin, A. (2020).Total Quality Management & Business Excellence[40]Delphi study/CFuture studies should continue to explore societal needs to verify how other high-level strategic challenges—such as collaboration and business models with customers and stakeholders, systematic QM knowledge at a strategic level, and operational management of new conditions—are critical for achieving a sustainable future with societal satisfaction (Sus A-7).Societal needsSocial Aspect
Societal satisfaction
8Lean-integrated management system: A model for sustainability improvement. 172, 2667–2682.Souza, J. P. E., & Alves, J. M. (2018).Journal of Cleaner Production[29]Action researchAFuture research will employ the “Lean Integrated Management System for Sustainability Improvement” (LIMSSI) to evaluate sustainability performance across various organizations. Additionally, exploring implementation challenges such as resistance to change, expenses, timelines, and behavioural view presents significant scope for future studies (Sus A-8).Registance to changeEmployee moral
CostsEconomic Aspect
TimelineTmeline
Behavioural viewSocial Aspect
9Organizational configurations for Sustainability and employee productivity: A qualitative comparative analysis approach.Delmas, M. A., & Pekovic, S. (2018).Business & Society[41]Qualitative comparative analysis (QCA)AThe focus was on environmental knowhow, but future research could examine the complementarity between environmental, social, governance, and innovative human resources practices (Sus A-9).Social practicesSocial Aspect
Governance practicesGovernance
Innovative Employee moral
human resources practicesSocial Aspect
While this paper focused on labour productivity, future research could explore how different practice configurations affect turnover, absenteeism, or job satisfaction (Sus A-9).Employee TurnoverEmployee moral
Absenteeism
Job Satisfaction
10Role reversal! financial performance as an antecedent of ESG: The moderating effect of total quality management.Chams, N., García-Blandón, J., & Hassan, K. (2021).Sustainability[34]Lag Regression analysis/modelSustainabilityFuture studies should further explore the discrepancy among financial proxies, specifically firm market valuation versus sustainability (Sus A-10).Firm market valuationEconomic Aspect
Limited data used only firm size and riskiness as controls; future studies should consider variables like R&D and advertising intensity (Sus A-10).Research and development intensityDynamic capability
Advertising IntensityMarketing
11Impact of JIT, TQM and green supply chain practices on environmental Sustainability: IMSGreen, K. W., Inman, R. A., Sower, V. E., & Zelbst, P. J. (2019).Journal of Manufacturing Technology Management[24]PLS SEM (Partial least square Sequential Equation modelBFuture research should include environmental and organizational constructs, such as culture, Industrial and market characteristics, to assess their impact on JIT, TQM, and green supply chain practices (Sus A-11).CultureLeadership role
Industrial CharacteristicsIndustrial Characteristics
Market CharactristicsMarket Charactristics
12Sustainability and quality management in the italian luxury furniture sector: A circular economy perspective.Barbaritano, M., Bravi, L., & Savelli, E. (2019).Sustainability[42]Case studySustainabilityFurther research on Circular Economy applications, particularly in the product end-of-life phase, is needed due to limited existing knowledge and practices (Sus A-12).End-of-life Phase of the ProductEnvironmental Aspect
Circular EconomyEnvironmental Aspect
13From sustainability constraints to Innovation: Enhancing Innovation by simultaneously attending to sustainability and commercial imperatives.Calic, G., Shevchenko, A., Ghasemaghaei, M., Bontis, N., & Tokcan, Z. O. (2020).Sustainability Accounting, Management and Policy Journal[33]Systematic Lit review/Paradox theoryBWhile this study develops the micro-mechanism between Sustainability and Innovation, future research can expand by identifying additional factors that influence this relationship and exploring the outlined boundary conditions in greater detail, such as external pressure and demand (Sus A-13).External pressureStakeholder engagement
External Demand
Financial Demands Stakeholders
Future research could explore the detailed boundary conditions, such as domain knowledge elasticity, to identify which types are context-specific and which are broadly applicable (Sus A-13).Elasticity of domain knowledgeKnowledge strategy
14Towards Sustainability by aligning operational programmes and sustainable performance measures.Caiado, R. G. G., Quelhas, O. L. G., Nascimento, D. L. d. M., Anholon, R., & Leal Filho, W. (2019).Production Planning & Control[22]Triangulation/pragmatic (Lit review, Survey and semi-structured interview)BFuture research should focus on social, environmental and governance concerns, and companies should achieve sustainability by implementing practices like Lean Six Sigma and adapting key performance measures to reflect stakeholder concerns and organizational culture objectives (Sus A-14).Market Sensitive to Environmental IssuesEnvironmental Aspect
Stakeholder concernStakeholder engagement
Social concernsSocial Aspect
Organization’s Corporate CultureLeadership role
15A socio-technical view of performance impact of integrated quality and sustainability strategies.Chaudhuri, A., & Jayaram, J. (2019).International Journal of Production Research[39]Socio-technicalAThe fit between social and technical dimensions may influence quality and sustainability outcomes. Future research could explore this by assessing the alignment using profile deviation scores, where higher deviation from the ‘ideal’ indicates poor alignment (Sus A-15). Alignment between social and technical dimensionsSocial Aspect
systems theory/International Manufacturing Strategy Survey (IMSS VI)/SEM
16The role of internal quality relations in driving sustainability performance.Alsawafi, A., Lemke, F., & Yang, Y. (2019).Procedia Manufacturing[37]Quantitative/survey/Structural equation modeling (SEM)NoLimitations of this study include measuring sustainability performance as a composite construct; future research could measure social, environmental, and economic dimensions separately, and examine other factors like external quality influences for varied results (Sus A-16).External Quality factorsStakeholder engagement
17Exploring the relationship between quality ambidexterity and sustainable production.Gomes, P. J., Silva, G. M., & Sarkis, J. (2020).International Journal of Production Economics,[23]Quantitative/survey/Qualitative Comparative Analysis (QCA)AFuture research should examine the role of product and process complexity, as increased product complexity can reduce the benefits of configuration ambidexterity, and process complexity negatively impacts environmental performance (Sus A-17). Product and Process complexityDynamic capability
Future research could investigate contextual factors influencing the configuration approach towards sustainable production, such as technological turbulence, competitive intensity, and long-term orientation, which affect exploration versus exploitation learning modes (Sus A-17). Technological TurbulenceTechnology
Competitive IntensityStakeholder engagement
Long-term orientationLeadership role
18Sustainability-oriented service innovation: An emerging research field.Calabrese, A., Castaldi, C., Forte, G., & Levialdi, N. G. (2018).Journal of Cleaner Production[32] AFurther research must explore organizational capabilities for implementing SOSI. This shift demands fundamental changes in business approaches, with key capabilities bearing significant managerial implications. Research can draw from abundant evidence on the intricate processes of servitization during transitions to service-oriented models. (Sus A-18)Organizational capabilitiesDynamic capability
Process of Servitization
19Open Innovation and its effects on economic and Sustainability innovation performance.Rauter, R., Globocnik, D., Perl-Vorbach, E., & Baumgartner, R. J. (2019).Journal of Innovation & Knowledge[28]Quantitative/surveyAThere’s scope for a detailed exploration of open innovation practices for sustainability innovation. For instance, studying how expertise on various sustainability issues can be sourced internally. (Sus A-19)Expertise in sourceDynamic capability
Iit’s intriguing to analyze how company factors affect internal acceptance and implementation of open innovation for sustainability. Organizational culture may influence acceptance of open innovation, impacting integration of sustainability concerns into innovation activities. (Sus A-19)Organizational cultureLeadership role
20The effects of corporate social responsibility on service innovation performance: The role of dynamic capability for Sustainability.Li, L., Li, G., Tsai, F. S., Lee, H. Y., & Lee, C. H. (2019).Sustainability[35]Quantitative/Survey/Structural equation modeling (SEM) and hierarchical regression analyses/social capital and dynamic capability theorySustainability Social CapitalSocial Aspect
The recognition of CSR’s role in enhancing corporate dynamic capability remains overlooked in current research. This study’s findings expand scholarly comprehension of dynamic capability antecedents. Revealing CSR’s positive impact on dynamic capability introduces a fresh perspective. Factors like social capital, networks, and knowledge acquisition are implicated and warrant future exploration. (Sus A-20)
Social NetworksSocial Aspect
Knowledge acquisitionDynamic capability
21Creating shared value through open innovation approaches: Opportunities and challenges for corporate sustainability.Camilleri, M. A., Troise, C., Strazzullo, S., & Bresciani, S. (2023).Business Strategy and the Environment[38]Qualitative/SLRA Businesses’ stakeholders’ ViewStakeholder engagement
Inductive research illuminates stakeholders’ views on cocreating incremental or radical innovations. It reveals contingent factors shaping negative perceptions of open innovation and hindrances to engagement in social entrepreneurship and environmentally sound initiatives. (Sus A-21)Social entrepreneurshipSocial Aspect
Environmentally sound initiativesEnvironmental Aspect
22Frugal innovation for sustainable rural development.Hossain, M., Park, S., & Shahid, S. (2023).Technological Forecasting and Social Change, 1[43]Qualitative/SLRAAdditionally, frugal entrepreneurs frequently use discarded or locally abundant raw materials to repurpose existing devices. Hence, research concerning the circular economy holds significant value. (Sus A-22)circular economyEnvironmental Aspect

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Figure 1. Frequency distribution of gap variables. Source: Appendix A: Table A1.
Figure 1. Frequency distribution of gap variables. Source: Appendix A: Table A1.
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Figure 2. Research framework. Source: Author’s self-model.
Figure 2. Research framework. Source: Author’s self-model.
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Figure 3. (a) Summary of the journal selection for independent variables. (b) Research Method. Source: Appendix A: Table A1.
Figure 3. (a) Summary of the journal selection for independent variables. (b) Research Method. Source: Appendix A: Table A1.
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Figure 4. Summary of the systematic literature review. * Source: Bibliography/Reference.
Figure 4. Summary of the systematic literature review. * Source: Bibliography/Reference.
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Figure 5. Summary of the literature (articles) studied. Source: Bibliography/Reference.
Figure 5. Summary of the literature (articles) studied. Source: Bibliography/Reference.
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Saxena, P.K.; Seetharaman, A.; Shawarikar, G. Factors That Influence Sustainable Innovation in Organizations: A Systematic Literature Review. Sustainability 2024, 16, 4978. https://doi.org/10.3390/su16124978

AMA Style

Saxena PK, Seetharaman A, Shawarikar G. Factors That Influence Sustainable Innovation in Organizations: A Systematic Literature Review. Sustainability. 2024; 16(12):4978. https://doi.org/10.3390/su16124978

Chicago/Turabian Style

Saxena, Praveen Kumar, Arumugam Seetharaman, and Girija Shawarikar. 2024. "Factors That Influence Sustainable Innovation in Organizations: A Systematic Literature Review" Sustainability 16, no. 12: 4978. https://doi.org/10.3390/su16124978

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