Linking stakeholder engagement to profitability through sustainability-oriented innovation: A quantitative study of the minerals industry

Abstract

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

Twitter Analysis of Global Communication in the Field of Sustainability

“…CSR is also important from the employee perspective. The CSR activities of a company have a significant influence on employee engagement [81]; customer behavior in choosing products [82,83]; stakeholders, whereby sustainability-oriented innovation enables firms to reap financial benefits [84]; and company owners, given that taking advantage of CSR activities leads to an increase in profits [85]. The hashtag #CSR was most strongly linked to the hashtag #esg, i.e., environmental, social, and governance (ESG).…”

The Effect of Innovation on Small and Medium Enterprises: A Bibliometric Analysis

“…Innovation helps to manage businesses in a sustainable way, which will have positive impacts not only on environment, but also on society by improving local communities and local businesses. According to Silvestre (2015) and Maier et al (2020), innovation is a key mechanism for addressing sustainable development; moreover, innovation can be driven by sustainability (Nidumolu et al, 2009;Ghassim and Bogers, 2019).…”

Power of Innovation on Performance and Socio-Environmental Sustainability

“…That is a consequence from the fact that companies that try to develop processes, products or services that harm less the environment, for example, improve their image, reputation and legitimacy with stakeholders (Aguilera-Caracuel; Ortiz-de-Mandojana, 2013). Ghassim and Bogers (2019) investigated companies of the mining industry and proved that the Sustainability-oriented innovation (SOI) links stakeholder's engagement with profitability. They found that the company's ability to develop Sustainability-oriented innovation (SOI) is improved by the engagement of stakeholders, as it provides a wide range of knowledge that supports the efforts and results of innovations.…”