PurposeGreen innovation can promote both environmental sustainability and economic growth. However, its development and implementation can be complex due to the need to align innovation activities within and across companies. In this study, the authors examined how this complexity can be managed by analyzing how individual companies combine different innovation activities to develop green innovation, and how companies along the value chain align to implement these innovations.Design/methodology/approachThe dataset comprises both interviews and a survey of senior executives from the Swedish wood construction industry. These data were first analyzed by using fuzzy set qualitative comparative analysis (fsQCA) to identify innovation activity configurations at the level of the individual company. The interviews were then analyzed to identify alignment mechanisms enabling the implementation of green innovation along the value chain.FindingsAt the company level, the authors found three innovation activity configurations with varying levels of complexity: (1) systemic innovation by proactive companies, (2) process innovation by reactive companies and (3) inaction by technology-independent companies. On the value chain level, the authors found three alignment mechanisms that facilitate the implementation of green innovation along the value chain. These mechanisms promote cooperation by increasing efficiency, opening up new market opportunities and increasing the level of servitization.Originality/valueThis paper analyzes the complexity of green innovation and provides novel insights into how complexity is managed at the level of both the individual company and the value chain.

This study examines how incumbents are responding to sustainability transitions through the process of creative accumulation. The research finds that these organizations are adapting by integrating new and existing knowledge to develop circular value propositions. The study emphasizes the importance of aligning around sustainable principles and shows that established players are well-positioned to collaborate and capitalize on changes.