Does Technological Innovation Drive Corporate Sustainability? Empirical Evidence for the European Financial Industry in Catching-Up and Central and Eastern Europe Countries

Abstract

In the financial industry, two relationships are well-researched: (i) innovation and financial performance and, (ii) sustainability and financial performance, both focused primarily on Western and advanced countries. The relationship between innovation and sustainability, however, is underresearched. This study's purpose consists of determining whether there is a relationship between innovation and corporate sustainability in the financial industry. In doing so, this study responds to a critical question: are the most innovative firms also the most sustainability-oriented? We empirically explore sustainability-oriented innovation in the financial industry of 11 catching-up countries in Central and Eastern Europe (CEE). Using Community Innovation Survey (CIS) data for 2012-2014, this study empirically analyzes a large sample of 1574 firms in the financial industry. Our results suggest that innovation is positively linked to corporate sustainability, pointing out that innovation capabilities are positively related to sustainability. Our study proposes a framework for analyzing innovation and sustainability from a capability-perspective.

Does a National Innovation System Encourage Sustainability? Lessons from the Construction Industry in Serbia

“…The transition to a sustainable economy has shaped the largest part of recent energy technology innovation process [43]. Studies that encompass sustainability and innovation for particular industries have been carried out, with most efforts having been focused on manufacturing, although there has also been some research in the financial industry [5]. Some aspects of collaboration have been noticed between actors in national innovation systems; for example, among industries and universities [10,11].…”

“…The sustainability essence of national innovation systems is based on consistent development in social, political, economic, and technological areas [52]. Central and Eastern European Countries (CEECs) have shown poor innovation and sustainability orientation compared to other Western countries [5].…”

“…The modern business environment has created a new concept of sustainability, observed in relation to innovation system perspectives. The relationship between innovation and sustainability has been reported in the literature [1][2][3][4]; however, it remains underresearched [5]. A national innovation system includes complex interactions between many institutional actors and processes which encourage innovation to create sustainable development.…”

“…Furthermore, sustainable development is seen as imperative for developing nations. Sustainability merges environmental, social, and economic performance, and includes different stakeholder interests with collaboration potential [5]. The same approach that takes into account stakeholder interactions could be applied to explain a national innovation system [8].…”

“…Some studies have investigated the influence of technological innovation on corporate sustainability and have found that Central and Eastern European Countries (CEECs) show poor innovation and sustainability potential compared with Western countries. However, despite this, the connection between innovation and sustainability has been recognized in the financial sectors of these countries [5].…”