A Systems Perspective on Sustainable Leadership and Innovation Capability: Building Organizational Resilience in a High-Tech Company

Abstract

While previous studies have examined sustainable leadership and innovation separately, limited attention has focused on their systemic interconnection. Building on established frameworks, this study adopts a systems perspective to explain how sustainability-oriented leadership mechanisms shape innovation capability across strategic, organizational, and functional levels. Drawing on a single-case study of an information-rich high-tech company, data were collected through semi-structured interviews and internal documentation to examine leadership practices and organizational enablers that foster innovation. The findings show that sustainable leadership strengthens innovation capability by embedding sustainability values into organizational routines, aligning strategic intent with daily learning, and empowering employees to experiment, collaborate, and share knowledge continuously. These feedback-driven processes connect strategic intent with operational learning, enabling organizations to adapt and renew. The study introduces the Systems Framework for Sustainable Innovation Capability (SFSIC), which explains how leadership, culture, and learning interact as interdependent components of innovation capability and organizational resilience. By framing innovation capability as a dynamic, feedback-driven process rather than a fixed set of determinants, the study advances theory by specifying how sustainability-oriented leadership strengthens adaptive capacity within innovation ecosystems. The study offers guidance for building innovation capability and resilience through aligned leadership practices, enabling structures, and feedback-based learning systems.

1. Introduction

Innovation and sustainability have become central themes in contemporary business research, particularly in technologically advanced and competitive markets [1]. Although innovation [2,3] and sustainability-oriented practices [4] have been widely studied independently, recent research increasingly highlights their dynamic interplay [5,6], emphasizing the need to better understand how sustainability influences innovation processes.

Sustainability refers to organizational practices aimed at integrating and balancing economic, environmental, and social concerns [7,8]. This perspective requires organizations to rethink how they innovate. Consequently, innovation becomes not only a competitive necessity but also a vehicle for long-term sustainability. Sustainability has been shown to serve both as a driver of innovation and as its outcome, underscoring their reciprocal relationship [1]. Leadership plays a pivotal role in this process, with sustainable leadership defined as the creation of long-term value through the integration of sustainability principles, ethical practices, and systems thinking into organizational culture, strategy, and operations [9]. Such leadership supports innovation [10] and strengthens organizational resilience and long-term competitiveness [11]. However, most studies adopt a normative perspective, offering limited insight into its practical functionality within technology-driven organizations.

Earlier studies have often portrayed innovation capability as a fixed set of determinants linked to firm performance [12]. However, more recent research conceptualizes it as a dynamic, system-based phenomenon shaped by feedback, interrelated processes, and continuous learning [13,14]. Likewise, sustainable leadership has been predominantly examined from normative and values-based perspectives [15], with limited empirical attention to how it operates in practice within technology-driven contexts [9]. These contrasting perspectives indicate the need for a systems view that links leadership mechanisms with innovation capability and explains how their interaction enhances organizational resilience. From this standpoint, innovation capability and sustainable leadership are regarded as interdependent and mutually reinforcing constructs. Together, they underpin organizational adaptability and long-term resilience, particularly in environments characterized by technological turbulence and rapid knowledge exchange [14,16]. In such environments, leadership mechanisms coordinate learning and innovation.

Despite substantial existing research, innovation capability and sustainable leadership as discrete entities have largely been examined as separate constructs, resulting in limited empirical understanding of their interaction within high-tech environments. Although interest in these concepts is growing, there is a dearth of research on the specific leadership mechanisms—such as feedback, coordination, or learning systems—that foster innovation in technologically advanced organizations. Existing studies also provide limited insight into the multi-level nature of this relationship, particularly how strategic intent, organizational structures, and individual practices interact to shape systemic innovation capability [13,14,17,18]. Consequently, a theoretical and empirical gap persists concerning how sustainable leadership can be intentionally designed and operationalized to enhance innovation capability within high-tech companies operating in dynamic and competitive environments [6,9,19,20].

To address this gap, this study examines how sustainable leadership strengthens organizational innovation capability by focusing on the mechanisms that coordinate strategy, structures, and learning. This paper proposes a Systems Framework for Sustainable Innovation Capability (SFSIC), drawing on a case study of a globally anchored high-tech company. The SFSIC examines how leadership, culture, and learning interact across strategic, organizational, and functional levels. The framework builds on existing models of innovation capability [12,21] and extends them by integrating a systems-based leadership perspective. It also demonstrates how these mechanisms operate in practice within a real-world case.

The study provides an empirical investigation into the perceptions and practices of innovation capability in relation to sustainability-oriented leadership within a high-tech industry. By applying a systems lens, the study reframes innovation capability as an emergent, feedback-driven property of sustainable leadership and organizational learning. From a systems perspective, innovation capability is not regarded as a static attribute; rather, it is conceptualized as a self-reinforcing system of leadership, culture, and learning that underpins organizational resilience [12,15,16].

The remainder of the paper is structured as follows. Section 2 reviews the theoretical background on innovation capability and sustainable leadership. Section 3 outlines the methodology. Section 4 presents the empirical findings, and Section 5 concludes with theoretical and managerial implications.

2. Theoretical Background

2.1. Innovation Capability

Innovation capability generally refers to an organization’s capacity to adapt to change by developing new solutions such as products, services, or processes that support competitiveness and long-term growth [13]. Scholars typically conceptualize it as a multifaceted construct that integrates managerial, technological, and strategic dimensions, including leadership, resource allocation, and organizational incentives [22]. This perspective has led many studies to operationalize innovation capability as a set of measurable determinants (see

Table 1. Overview of literature addressing the determinants of innovation capability.

Innovation Capability Dimension 1,2,3	[23]	[24]	[25]	[26]	[27]	[28]	[22]	[29]	[30]	[31]
Strategy and Vision	✓	✓	–	–	–	–	✓	–	–	✓
Leadership Practices	✓	–	–	–	✓	–	✓	–	–	✓
Employees’ Skills and Innovativeness	✓	✓	✓	–	–	✓	✓	✓	✓	✓
Idea Management Processes	✓	–	–	✓	–	–	✓	–	–	✓
Innovation-Supporting Culture	✓	–	–	✓	✓	✓	✓	✓	–	✓
Knowledge Development and Learning	✓	✓	✓	–	–	✓	✓	✓	✓	✓
External Sources of Information	–	✓	–	–	–	–	✓	–	–	✓
Technology Management	–	–	–	✓	–	–	✓	–	✓	✓
Organizational Resources	–	–	–	–	✓	✓	✓	✓	✓	✓
Employee Welfare	–	–	–	–	–	–	–	–	–	✓

Note 1. The first row lists the literature sources (numbers in square brackets correspond to the reference list). Note 2. The comparative layout highlights which determinants are consistently emphasized across studies and which remain underexplored. These recurrent dimensions served as sensitizing concepts for developing the analytical categories at strategic, organizational, and functional levels. They informed the interview design and initial coding, while still allowing new themes to emerge inductively. Note 3. ✓ indicates that the study includes the innovation capability dimension; – indicates that the study does not.

). Although such classifications help organizations assess innovation-related practices, they often treat determinants as independent categories, neglecting to examine their interactive nature. In contrast to determinant-based classifications, recent research conceptualizes innovation capability as a dynamic, system-based phenomenon shaped by feedback, collaboration, and continuous learning [14,23]. From this standpoint, innovation capability emerges from the dynamic interplay between human actors, organizational structures, and technological systems, rather than being the result of isolated factors. Accordingly, a systems view emphasizes reciprocal feedback loops, cross-level alignment, and adaptive learning processes.

Earlier studies have often described innovation capability as a fixed set of factors linked to firm performance [12], implicitly assuming that these determinants operate independently rather than through interaction. However, recent studies have challenged this assumption by conceptualizing innovation capability as a living system that is continuously shaped by learning, collaboration, and contextual change [14]. Similarly, sustainable leadership has predominantly been examined from ethical or values-based perspectives [15], providing a limited understanding of how leadership mechanisms act systemically to enable innovation in technology-driven organizations. Although recent studies have begun to explore this connection (e.g., [19]), the field still lacks integrative frameworks that explain how leadership, culture, and learning operate as interdependent subsystems of innovation capability and how they jointly produce systemic outcomes.

Notwithstanding the substantial progress made in both areas, significant gaps persist in the literature. Firstly, sustainable leadership, enabling mechanisms, and innovation capability are frequently studied as separate constructs rather than as interdependent elements of a systemic whole (e.g., [1,13]). Secondly, although previous reviews have identified numerous factors that influence innovation capability (e.g., [2,3]), existing research provides a limited explanation of how these factors interact dynamically across strategic, organizational, and functional levels (e.g., [1,13]). Thirdly, empirical research on high-tech SMEs rarely adopts a systems perspective to explore how sustainability-oriented leadership shapes innovation capability over time [15]. This study aims to address these gaps by conceptualizing innovation capability as an emergent, multi-level phenomenon enabled by sustainable leadership.

While dynamic capabilities theory provides insight into how firms reconfigure resources [18], it offers a limited explanation of how such reconfiguration is coordinated across organizational levels. Likewise, sustainable leadership research emphasizes ethical and long-term values [15], yet rarely clarifies how leadership mechanisms translate these values into operable structures and learning practices. Adopting a systems perspective addresses this gap by conceptualizing innovation capability as an emergent outcome of interdependent feedback loops rather than as a collection of independent determinants [1,13,14]. This perspective requires leadership to act as a coordinating mechanism across strategic, organizational, and functional levels.

Building on these insights, this study adopts a systems perspective that conceptualizes sustainable leadership, organizational enabling mechanisms, and innovation outcomes as mutually reinforcing subsystems—an integration that has been largely absent in prior work. The proposed SFSIC framework extends previous conceptualizations of leadership and innovation (e.g., [1,15,22]) by emphasizing the dynamic interdependencies and feedback loops through which leadership aligns strategic intent, organizational routines, and individual behaviours. In this view, leadership functions as a coordinating mechanism that fosters adaptability, learning, and long-term resilience—capabilities that are particularly critical in high-tech environments where rapid knowledge exchange requires continuous alignment across organizational levels.

Despite the absence of a consensus within the extant literature concerning the relative importance of these determinants [2,17], current research nevertheless provides a useful conceptual foundation for the design of the interviews. Specifically, it highlights the need to examine not only the presence of specific practices, but also the interactions among strategic, organizational and functional mechanisms. Table 1 summarizes key studies on the determinants of innovation capability (e.g., [22,23,24,25,26,27,28,29,30,31]), providing the analytical basis for identifying the core dimensions examined in this study—leadership, organizational enablers, and individual learning processes—while allowing additional emergent categories to surface inductively from the data.

Although prior research on innovation capability has advanced theoretical and quantitative modelling, critical limitations remain in how the construct is operationalized. Quantitative studies typically examine a narrow subset of measurable determinants, which can lead to an oversimplification of a construct that is inherently dynamic and multi-level. By focusing on specific factors, these studies overlook the interaction and evolution of managerial, technological and strategic dimensions over time. This limits insight into the coordination mechanisms through which innovation capability develops in practice.

This gap underscores the importance of conceptualizing innovation capability as an interconnected system rather than a set of individual factors. Adopting this perspective enables an understanding of how leadership, organizational enablers, and learning processes interact to influence innovation outcomes and long-term adaptability. Adopting this systems-based approach helps to develop a more comprehensive understanding of innovation capability by emphasizing the coordination mechanisms through which organizations promote learning, adaptability and innovation performance.

2.2. Conceptual Framework: Linking Sustainable Leadership and Innovation Capability

As organizations seek to create economic, social, and environmental value, innovation and sustainability are becoming increasingly interconnected. Sustainable innovation involves developing products, services, processes, and business models that fulfil current requirements while addressing environmental and social challenges responsibly [1]. This necessitates the integration of sustainability principles into innovation processes, with the aim of advancing the well-being of stakeholders and society through organizational solutions.

Prior studies indicate that sustainable leadership is grounded in long-term thinking and the ability to promote systemic, cross-boundary innovation that benefits stakeholders and employees alike [11,20]. Such leadership emphasizes adaptive, learning-oriented cultures that encourage shared responsibility, collaboration, and empowerment, moving beyond traditional leader-centric models [32,33]. In rapidly changing, technology-driven contexts, sustainable leadership functions as a dynamic and integrative capability [18], which enables organizations to identify emerging opportunities, reconfigure resources, and adapt their innovation systems to remain resilient over time. These leadership mechanisms influence both strategic direction and everyday organizational practices, underscoring their relevance at multiple levels as coordinating forces that align structures, behaviours, and learning processes.

Sustainable leadership fosters innovation by embedding long-term values into decision-making and by mobilizing collective stakeholder action toward sustainability-oriented goals [7]. Building on recent work (e.g., [34,35]), this study examines how sustainable leadership enables innovation capability through multi-level, feedback-driven mechanisms. These mechanisms operate across three mutually reinforcing levels—strategic, organizational, and functional—forming a self-regulating system of innovation and renewal [13,14]. Specifically, sustainable leadership exerts a significant influence on innovation capability through the following mechanisms:

• Strategic level: establishes and embeds a long-term, sustainability-oriented vision into core values and strategic direction. Leadership aligns purpose, culture, and strategic priorities to steer innovation toward environmental and social goals.
• Organizational level: involves designing structures, processes, and technology systems that support idea generation, evaluation, and implementation. Leadership shapes organizational routines that integrate sustainability into the innovation pipeline.
• Functional level: focuses on the empowerment of individuals and teams through skill development, well-being, and knowledge sharing. Leadership enhances access to information and fosters a learning climate that strengthens everyday innovation capability.

This multi-level coupling reflects the foundational principles of systems thinking, in which organizational outcomes emerge from interdependent feedback loops among structures, individual actions, and shared mental models [36,37].

The proposed framework draws on and adapts the multi-layered systems architecture introduced by Peppard and Ward [38] and recent extensions [39], conceptualizing organizations as composed of three interdependent and dynamically coupled layers: strategic, organizational, and functional. At the functional level, organizations develop foundational resources that serve as building blocks for innovation-related competencies. These resources encompass individual competencies, technical and domain-specific knowledge, and collaborative attributes embodied in internal and external stakeholders. It is useful to differentiate such resources into two categories: business and domain expertise [40], and technical skills and technological experience [41]. At the organizational level, these resources are mobilized and coordinated through structures, processes, routines, and technologies to build innovation competencies. At the strategic level, organizations transform these competencies into innovation capabilities by integrating knowledge and skills in order to sense opportunities, make strategic decisions, and reconfigure systems for the development and implementation of new solutions [42]. Sustainability-oriented competencies further reinforce innovation capabilities by directing solutions toward long-term environmental, social, and economic goals [14]. This layered view highlights the importance of analyzing how leadership practices coordinate these interconnected mechanisms shaping systemic innovation capability.

The proposed SFSIC framework addresses these gaps by offering a theoretically grounded architecture that conceptualizes how sustainable leadership shapes innovation capability through multi-level, reciprocal feedback loops. The SFSIC framework differs from extant models by conceptualizing innovation capability as an emergent system property, generated through the integration of strategic leadership intent, organizational enablers, and functional learning. The framework integrates insights from sustainable leadership, dynamic capabilities, systems thinking, and innovation capability by conceptualizing leadership as a coordinating force that aligns structures, routines, and behaviours over time. Through this integration, the SFSIC provides a coherent theoretical explanation of how leadership-driven alignment, learning, and adaptability reinforce one another to support long-term innovation resilience.

Despite substantial progress in the fields of innovation management, sustainability, and organizational systems, limited research has examined the interaction between sustainable leadership and innovation capability as a dynamic, mutually reinforcing system. The SFSIC framework advances existing conceptual models by offering a multi-level explanation of how innovation capability emerges from interactions among leadership, organizational enablers, and functional learning. Classic dynamic capabilities theory [43,44] highlights the importance of sensing, seizing, and reconfiguring resources, yet offers a limited explanation of how these processes are orchestrated through leadership practices across multiple organizational layers. Innovation capability models (e.g., [22,23]) identify key determinants, but often treat them as parallel categories rather than as interdependent subsystems connected by feedback loops. Sustainable leadership frameworks, such as Avery and Bergsteiner’s Honeybee Model [15], articulate ethical and strategic principles but provide limited insight into how leadership translates into concrete organizational and functional mechanisms for innovation. Furthermore, systems thinking approaches (e.g., [36]) emphasize interdependence and feedback but do not explicitly integrate leadership or innovation capability within their architecture. In particular, these systems perspectives do not specify the organizational and functional pathways through which leadership influences innovation outcomes.

This conceptual fragmentation gives rise to a theoretical gap that the SFSIC framework addresses by conceptualizing the interrelationships among leadership, enabling mechanisms, and functional learning as well as by explaining their reciprocal interdependencies. Accordingly, the SFSIC offers a theoretically grounded, multi-level account of innovation capability as an emergent, systemic phenomenon enabled by sustainability-oriented leadership. By synthesizing these perspectives, the SFSIC framework proposes a unified systems architecture that explains how leadership-driven alignment, learning mechanisms, and cross-level coupling jointly produce innovation capability as an emergent organizational outcome.

In essence, the framework conceptualizes the interaction between sustainable leadership and innovation capability as a systems model in which leadership functions as the systemic enabler and innovation capability emerges as an organizational outcome.

Table 2. Key concepts and their roles in the conceptual framework.

Concept	Definition/Scope	Role in Framework
Sustainable Leadership	Strategic leadership approach focused on long-term value creation through ethical decisions, responsible resource use, and a commitment to employee, societal, and environmental well-being [9,15,20].	Systemic enabler that aligns strategy, culture, and learning processes by initiating feedback loops that embed sustainability principles into everyday decision-making and innovation routines.
Innovation Capability	Organizational ability to sustain innovation by executing processes that generate outcomes in the form of new products, services, or processes [3,10]. Operationalized through multiple dimensions across strategic, organizational, and functional levels (see Section 2.1).	Emergent outcome driven by sustainable leadership manifested through adaptive structures, knowledge sharing, and continuous renewal that reinforce long-term organizational resilience.

Source: Own elaboration, 2025.

summarizes the key constructs underlying the Systems Framework for Sustainable Innovation Capability (SFSIC). It distinguishes sustainable leadership as a coordinating, feedback-driven subsystem and innovation capability as an adaptive, outcome-oriented subsystem, highlighting their interdependence within a multi-level architecture. The framework explains how leadership mechanisms translate strategic intent into organizational learning and innovation, through the coordination of structures, routines, and knowledge flows, thereby shaping the organization’s long-term adaptability and resilience. Rather than treating sustainable leadership primarily as a normative construct, the SFSIC emphasizes its operational translation into routines, learning processes, and innovation outcomes.

This study adopts an inductive research approach, aiming to build understanding from empirical data as opposed to testing predefined hypotheses. The SFSIC conceptual framework guided the interview design and thematic analysis, serving as a sensitizing rather than prescriptive model [45]. Following principles of systems thinking, insights were derived from patterns, relationships, and feedback loops identified in participants’ experiences, enabling data-driven, contextually grounded theory building. Accordingly, the following research questions were developed:

• RQ1: What are the key dimensions of innovation capability as perceived and enacted within a high-tech company?
• RQ2: How does sustainable leadership contribute to developing and strengthening innovation capability in a high-tech company?

In line with these questions, the study aims to explore how innovation capability is perceived and practiced, and to analyze how leadership mechanisms support its development in a complex, technology-driven environment.

3. Research Methods

To investigate how a high-tech firm develops and sustains innovation capability through sustainability-oriented leadership, a case study design was selected [46]. This qualitative design responds to recent calls for more interpretive, context-sensitive research on how leadership mechanisms shape innovation outcomes. Survey-based approaches have been found insufficient for capturing leader-driven innovation processes, reinforcing the need to examine the micro-level dynamics through which innovation capability emerges in practice [47,48]. Additionally, recent studies demonstrate that leadership–innovation interactions are relational, non-linear, and embedded in daily organizational routines, making them difficult to capture through standardized instruments alone. These dynamics therefore require a qualitative approach to explore how sense-making, collaboration, and feedback processes contribute to innovation outcomes [49].

This approach aligns with the exploratory and context-sensitive nature of the research, which seeks to reveal underlying mechanisms, dynamic interconnections, and feedback processes within a real-world organizational system. Alternative approaches, such as surveys or multiple case studies, would not provide the depth and contextual complexity needed to explore this emerging phenomenon. This aligns with guidelines in case-study research, which emphasize that single cases are appropriate when the goal is to examine complex mechanisms and context-dependent processes in depth [46,50,51]. This methodological choice follows a strategy of theoretical sampling and abductive reasoning, in which the aim is not statistical generalization but conceptual development grounded in context [46,50]. The utilization of abductive reasoning enabled iterative interplay between theoretical concepts and empirical insights throughout the research process.

The single-case design enabled in-depth examination of leadership dynamics and innovation capability within a specific organizational context, and was essential for addressing the research objectives. Case study research is suitable for contextual analysis and theory development, particularly when the aim is to understand complex organizational phenomena [50,52,53]. To enhance analytical rigour, the study employed methodological triangulation by integrating multiple sources of evidence, including semi-structured interviews, internal documentation, and company reports. This convergence of insights strengthened empirical grounding in line with established case study guidelines [46]. Data triangulation was implemented through the systematic integration of these qualitative data sources. Investigator triangulation was applied throughout analysis, as all authors jointly reviewed themes, engaged in reflexive discussion, and critically examined alternative interpretations. Finally, theory triangulation was used to compare the emerging empirical patterns with established frameworks on sustainable leadership, systems thinking, and innovation capability.

The study employed an iterative and triangulated research design integrating theoretical insights, semi-structured interviews, and in-depth case data. Figure 1 illustrates how these complementary inputs interact to strengthen validity and contextual richness.

3.1. Case Selection

A number of theoretical sampling criteria were established to identify a case that could illuminate the mechanisms of interest [51]. The procedure followed a theoretical sampling logic aimed at selecting a case particularly suitable for this purpose. The case study company had to be a high-tech manufacturing company with well-established innovation processes and a proven track record of technological and organizational innovation. It also had to have publicly available sustainability reports or certifications. Using these criteria, multiple candidates were identified through a purposive selection strategy, each offering sufficient relevance for theory-building. The final case selection was determined after preliminary discussions confirming access to multiple data sources, including interviews across hierarchical levels, internal reports, and external documentation. Securing access ensured sufficient empirical depth to examine leadership and innovation mechanisms across organizational levels. This approach follows a theory-building logic [50], in which cases are selected for their potential to reveal mechanisms and contextual relationships relevant to sustainable leadership and innovation capability. Accordingly, the case offered sufficient depth and variation across strategic, organizational, and functional layers [46], making it suitable for examining how multi-level leadership practices shape innovation capability.

The selected organization serves as an information-rich case [51,52] suitable for theory-elaborating research, enabling examination of how leadership practices influence innovation capability in a high-tech context. The organization’s headquarters and strategic leadership are located in Slovenia, thereby situating the study within the institutional environment of a Central European innovation system. Its products are distributed globally, which requires coordination mechanisms for transferring high-tech knowledge and managing innovation across markets, thereby offering an empirical context in which leadership practices, organizational mechanisms, and daily innovation work can be studied simultaneously.

The primary unit of analysis is the organization, conceptualized as an integrated system. It was analyzed through its strategic, organizational, and functional processes linked to sustainable leadership and innovation capability. In line with an embedded single-case design, three analytical units were delineated. The strategic-level unit includes senior leadership responsible for shaping long-term direction and allocating resources. The organizational-level unit comprises middle management and process owners who translate strategic intent into structural routines and operational mechanisms. The functional-level unit consists of specialists and engineers whose daily work practices provide bottom-up insights into knowledge flows, enabling mechanisms, and innovation processes. Using a systems perspective, the case allows the examination of feedback loops linking strategic intent, organizational culture, and individual behaviour, analyzing innovation capability as a dynamic, adaptive, and evolving construct [12,29].

Brief Introduction of Case Company

To preserve confidentiality, the company is referred to throughout this paper as “Company Zeta.” It is a medium-sized, high-technology company with approximately 250 employees, specializing in measurement and data acquisition solutions. Founded 25 years ago, Company Zeta develops hardware and software for real-time data acquisition and analysis used in industries such as automotive, aerospace, energy, and engineering. Its products are distributed internationally and used by organizations worldwide. Company Zeta offers an information-rich context for examining how leadership interacts with organizational mechanisms and daily engineering practices in shaping innovation capability.

3.2. Data Collection

Following Barratt et al. [53], data were collected through semi-structured interviews and archival sources, including internal documentation and company evaluation reports, to enable triangulation of insights. The case is temporally bounded by the data collection period (July–August 2024), during which semi-structured interviews and internal documentation were gathered. The data collection process was conducted at the company’s headquarters in Slovenia, thereby delineating the spatial boundaries of the case. Explicit specification of these boundaries is consistent with established case study research guidelines [46].

The archival material included performance evaluation records, internal reports describing organizational practices, and a set of process-related documents provided by the company. A multi-source design was adopted to capture interactions across organizational levels, consistent with the study’s systems perspective. This multi-level coverage ensured that the data reflected both top-down and bottom-up perspectives required to analyze systemic interactions.

We conducted 11 interviews with employees across strategic, organizational, and functional levels representing different departments (

Table 3. Summary of respondents’ (interviewees’) profiles.

Respondent	Role	Level of Education (EQF)	Age	Experience	Interview Mode	Interview Duration (min)
R1	CEO	7	44	20	remote	67
R2	Head of production	6	39	3	remote	57
R3	Head of quality	7	42	2	remote	44
R4	Head of development	8	41	17	remote	41
R5	Head of HR and Compliance	7	33	1	remote	36
R6	Head of logistics	7	46	7	remote	41
R7	Instrument Assembly Manager	5	31	8	remote	57
R8	Senior Development Engineer for Mechanical Systems	6	36	12	remote	41
R9	Senior Software Development Engineer	6	27	4	remote	46
R10	Investment Specialist	7	55	1	remote	74
R11	Senior Associate for Strategic Procurement	7	36	1	remote	50

Source: Own elaboration, 2025.

). This structure enabled multi-level and cross-functional insights into the mechanisms linking leadership practices and innovation capability. The sample size aligns with qualitative standards for information-rich, in-depth case study research by capturing contrasting perspectives across organizational layers. Sample adequacy followed the principle of conceptual depth [54], emphasizing richness, variation and interpretive complexity over predefined numerical targets. Given the exploratory and abductive design, the sample size was assessed iteratively during analysis rather than being fixed a priori [55]. The final set of 11 interviews provided adequate conceptual depth, empirical breadth, and cross-level variation supporting a nuanced understanding of how sustainable leadership shapes innovation capability.

The interview questions were informed by literature on innovation capability and sustainable leadership (e.g., [9,12]), and guided by a systems perspective emphasizing interconnections among leadership, culture, and learning. These principles additionally guided the iterative refinement of the SFSIC model. To ensure theoretical alignment, each major construct (e.g., strategic orientation, enabling mechanisms, knowledge sharing, empowerment) was operationalized into corresponding interview probes. Six open-ended questions were prepared to guide the discussion while allowing participants to elaborate on their experiences (see Appendix A for sample items). The guide remained flexible, enabling follow-up questions to explore mechanisms emerging during the conversation, consistent with abductive inquiry and the emergent nature of systemic mechanisms. All interviews were conducted remotely via Google Meet and transcribed verbatim using an automated tool. Transcriptions were manually verified, anonymized, and reviewed to ensure data integrity and ethical compliance. Thematic patterns were developed through iterative team-based reflection and interpretive dialogue, consistent with reflexive thematic analysis [56]. Initial descriptive coding was followed by pattern coding and theme consolidation, with discrepancies discussed collaboratively to ensure coherence of themes. This iterative process enabled insights to be generated through dynamic interaction between data, context, and theory, consistent with an abductive and system-oriented approach.

In addition to interview data, secondary sources such as internal reports and sustainability documents were analyzed to triangulate findings and validate emerging themes, thereby strengthening the credibility of interpretations. All participants were assured of confidentiality, and data collection adhered to established ethical research guidelines.

3.3. Data Analysis

A reflexive thematic analysis (TA) approach [51] was applied and grounded in interpretive and abductive logic. The analytic process was iterative rather than linear, allowing movement across phases as new insights emerged.

In line with Braun and Clarke’s [56] six-phase framework, all researchers first familiarized themselves with the data through repeated reading, memo writing, and reflexive engagement. Systematic coding followed, combining sensitizing concepts from the literature with inductive codes that captured extensions or nuances beyond existing theoretical categories, while avoiding the imposition of predefined structures. Coding was conducted manually using Microsoft Word and Excel, enabling flexible iteration, reflection, and refinement consistent with reflexive TA, instead of relying on pre-structured software templates. Instead of constructing a rigid coding frame, the codes were refined through cycles of reflection, comparison, and interpretive discussion, consistent with abductive inquiry.

Initial codes were clustered into broader meaning patterns, which were reviewed for internal coherence and conceptual distinctiveness before being developed into themes. Themes were further refined by examining their fit with the coded extracts and through iterative comparison with the dataset as a whole. Throughout this process, researcher subjectivity was treated as an analytic resource, consistent with reflexive TA principles. To enhance transparency, Appendix B exemplifies how descriptive codes were clustered into subthemes and themes throughout the analytic process.

Analytical credibility was supported through complementary forms of triangulation, as introduced earlier in Section 3 (see Figure 1 and accompanying description). Accordingly, interpretations were verified through data triangulation across interviews, documents, and reports, while investigator triangulation facilitated collaborative interpretation of divergent analyses. In line with reflexive TA, the aim was not consensus or inter-rater reliability, but the development of rich, interpretive insights grounded in researcher reflexivity.

Verbatim quotes were used to illustrate key themes and to maintain participants’ voices as central to the interpretive process. This interpretive use of quotations supported the development of themes while preserving systemic linkages between empirical observations, theoretical constructs, and contextual factors. The analytical workflow is summarized in Figure 2, which illustrates the iterative progression from data collection to thematic synthesis.

4. Case Analysis and Findings

This section presents the results of the case study analysis that examines the relationship between sustainable leadership practices and innovation capability in Company Zeta. The key findings emerged from a reflexive and abductive thematic analysis [56], as outlined in Section 3.3. To ensure clarity and coherence, the results are organized into three analytical categories (i.e., levels): strategic, organizational, and functional. This structure follows the framework established in Section 2.2 and enables an in-depth exploration of how leadership mechanisms operate across interconnected levels to shape innovation capability.

4.1. Key Findings on Innovation Capability and Sustainable Leadership

4.1.1. Strategic Level

Table 4. Main features of innovation capability development in Company Zeta—Strategy, leadership and culture.

IC	Category	Underlying Mechanism	Explanation
Strategy and Vision	Long-Term Strategic Planning	“100-Year Plan” emphasizing sustainability and legacy	It represents a long-term vision that encompasses future generations and reflects a commitment to sustainability through knowledge preservation and continuous development.
	Employee Ownership	100% employee ownership model for engagement	The model involves all employees, from executives to operational staff, while the distribution of shares reflects factors such as tenure and organizational role. It promotes loyalty and aligns personal interests with long-term company goals.
	Business Model	A Hybrid Business Model that fosters collaboration and co-creation	The company applies the Vested model in external partnerships to foster mutual value, leveraging external expertise and resources to complement internal R&D activities. Built on trust and shared innovation goals, these alliances enable access to advanced technologies and joint market opportunities.
	High Reinvestment in Development	80% profit reinvestment in R&D	The company reinvests 80% of its profits into development, thus maintaining competitiveness in the long term and creating new opportunities without increasing financial risk.
	Goal Alignment and Progress Tracking	OPR (Objectives, Plan, Review) System	It is a three-stage system for setting objectives and planning activities based on a previously adopted strategy, ensuring progress monitoring, transparency and measurability.
Leadership Practices	Accessible Management	Open-Door Policy	Employees can approach their superiors at any time with ideas, concerns or questions, which contributes to mutual trust, knowledge and experience sharing, and professional growth.
	Inclusive Strategic Planning	Annual Company Meetings	This event serves as a platform where management presents objectives, plans, and market dynamics while using employee feedback to clarify ambiguities and ensure that roles, tasks, and their purposes are clearly understood.
	Accessible Leadership and Continuous Feedback Loop	The ability of leadership to communicate openly on a day-to-day basis.	Managers interact with employees daily to build relationships, enhance efficiency and gather feedback to improve products and prevent errors. The accessible leadership of the CTO strongly drives the realization of the company’s technological vision.
Supporting culture	Supportive Experimentation	Learning from Failure Philosophy Discovery-driven innovation	The fundamental principle of the organizational culture is psychological safety, which enables calculated risk-taking and frames mistakes as opportunities for learning and improvement.
	Open Communication	Transparent Communication Practices	A fundamental driver of organizational culture vitality is transparent communication, which prevents silo formation, fosters teamwork, and strengthens innovation.
	Strong Identification with Values	Core Values Alignment	Core values are a living thing because they are reflected in the daily activities of management and employees, thus ensuring a consistent culture that promotes long-term sustainability and continuous development.
	Recognition and Motivation	Reward Innovation Program	Employees who propose process or product improvements are rewarded for their contributions.

Source: Own elaboration, 2025.

summarizes the strategic mechanisms that interviewees associated with the development of innovation capability. Participants emphasized that a clearly articulated innovation strategy and long-term roadmap serve as anchoring mechanisms that maintain continuity and clarity of direction. This orientation is symbolized in the “100-year plan,” referenced across hierarchical levels as a shared strategic anchor. As the CEO explained, “Our 100-year vision ensures continuous development and includes future generations.” This indicates that the long-term plan is not merely aspirational but actively guides strategic choices with future employees in mind. Several participants echoed this view, describing decisions that “should benefit future employees,” suggesting that innovation is framed as an intergenerational responsibility rather than a short-term competitive tactic.

A second mechanism frequently mentioned by interviewees is the company’s 100% employee-ownership model, which is regarded as a catalyst for long-term strategic development. As the CEO stated, “Employees need to understand that ownership brings long-term benefits—usually over a ten-year period. We tell them that they work for themselves and that we work together for long-term goals.” Respondents linked ownership to long-term retention, deeper expertise accumulation, and decision-making aligned with collective rather than short-term individual interests.

Interviewees emphasized that the company deliberately limits the expansion of its core business. As stated by the Operations Manager, “Approximately 30% of development is carried out through outsourcing,” whereby external partners take over tasks outside the company’s core expertise. This practice was described by several respondents as a way to maintain agility and avoid structural complexity. The CEO further noted, “to avoid excessive growth that could negatively affect our culture, we are building companies around ours … which allows us to preserve our spirit”. Interviewees interpreted this approach as protecting organizational culture while enabling focused scaling.

Several participants also described an open approach to internal collaboration and external competition as a strategic mechanism for sustaining innovation pace. As the Head of Development stated, “By the time someone could copy or steal our solutions, we have already progressed and launched new innovations.” Interviewees perceived this openness as relying on continuous improvement rather than secrecy, emphasizing confidence in learning speed instead of protectionism.

Together, these mechanisms reflect strategic choices that prioritize long-term continuity, cultural preservation, and sustained expertise development as foundations of innovation capability.

4.1.2. Organizational Level

Table 5. Main features of innovation capability development in Company Zeta—Processes, tools and technology.

IC	Category	Underlying Mechanism	Explanation
Processes and Tools for Idea Management	Business Agility	SAFe (Scaled Agile Framework)	SAFe provides a structured framework for organizational improvement by promoting lean and agile decision-making. It aligns departmental activities with strategic objectives, enabling continuous development and greater organizational flexibility.
	Teamwork and Problem Solving	Structured and unstructured innovation process setup	The structured approach is goal-oriented, whereas the unstructured approach fosters interpersonal dynamics and experimentation. Agile, Lean, and Scrum methodologies are commonly applied, with team formation also considering personal interests and life experiences.
	Idea Management	Idea Management System	The company uses an idea management system to systematically track, evaluate, prioritize, and implement employee suggestions.
	Idea Council	Forum for employees to present and refine ideas	Weekly 30 min sessions address challenges, share ideas and propose solutions to encourage collaborative improvement of products and processes. Short daily meetings further promote collective reflection and team alignment.
Technology Management	Integrated ERP System	Real-time data sharing and process integration	The ERP system enhances operational efficiency and transparency by integrating data and processes across departments.
	Automation and Productivity	Automation Tools	Automation is a continuous process aimed at streamlining and simplifying work processes to free up more energy and time for employees to focus on creativity and innovation.

Source: Own elaboration, 2025.

shows that Company Zeta develops its innovation capability through integrated organizational mechanisms perceived as core competencies. Business agility, supported by the Scaled Agile Framework (SAFe), serves as the main mechanism for knowledge development and organizational learning. SAFe provides a structured, lean, and agile decision framework that transforms specialized employee skills into aligned organizational competencies. It also creates short feedback loops between planning and execution, enabling fast adjustment without disrupting workflow stability. According to the Head of Development, the key aim of each planning increment is “to change priorities and tasks as little as possible during these three months.” This indicates that stability is intentionally maintained to enable experimentation without constant disruption. Several interviewees described how teams are constantly experimenting, reflecting on their work, and adjusting their processes in response to stakeholder input, creating an iterative learning cycle. Such an adaptive structure was perceived as a feedback system that translates sustainability-oriented leadership into learning-driven innovation. In this way, leadership vision is operationalized through iterative learning rather than top-down directives.

The integrated ERP system ensures real-time process and data transparency, functioning as a key technology-management mechanism that supports coordination and knowledge flow. As the Quality Manager noted, “All employees receive the same information, regardless of the department they work in.” This shared access allows employees to coordinate decisions based on identical data rather than fragmented information. Several interviewees described identical data access as enabling alignment of priorities, reducing coordination delays, and minimizing information asymmetry—resulting in faster problem-solving and more collaborative decision-making.

The systematic approach is further reinforced by the Idea Management System and Idea Council, which formalize bottom-up insights from the functional level. Several interviewees emphasized that suggestions are not evaluated solely in terms of efficiency gains but also with regard to safety. As stated by the Head of Assembly, “We also reward proposals related to safety.” This finding suggests that improvement processes address both operational performance and workplace well-being. This indicates that risk reduction and employee safety are regarded as integral components of innovation efforts, rather than as discrete compliance tasks.

Employee-driven improvement is reinforced through weekly idea forums that encourage continuous contribution and discussion of ideas. As one interviewee explained, “We always have open doors for ideas… If the idea is good, we check it through certain filters and then implement it.” This process is characterized by its openness and systematic nature, with ideas undergoing transparent evaluation prior to implementation.

These mechanisms are supported by both structured approaches (e.g., Agile, Lean) and unstructured setups (e.g., Idea Council), forming enabling competencies that connect sustainable leadership with the development of innovation capability. Together, they operate as interdependent feedback systems that align operational routines with strategic intent, reinforcing innovation capability through transparency, safety, and continuous learning.

4.1.3. Functional Level

From a functional-level perspective, innovation capability is driven by individual and organizational learning, knowledge sharing, and both intra- and inter-organizational collaboration (

Table 6. Main features of innovation capability development in Company Zeta—Employees.

IC	Category	Underlying Mechanism	Explanation
Employees’ Skills and Innovativeness	Foundational Training	Entry-Level Training	This 14-day training program aims to equip employees with the ability to perform specific tasks independently and to facilitate their integration into the company’s organizational culture.
	Professional Growth and Support	Ongoing Mentorship	Each new employee is assigned a mentor who, over a three-month period, familiarizes them with the work system, materials, and business processes.
	Collaborative Practices	Cross-Departmental Teamwork	Departments communicate continuously to monitor workflows, coordinate activities, overcome challenges, and develop solutions.
	Knowledge accumulation	Internal Knowledge Sharing; Collaborative R&D and Strategic Alliances	Technological capabilities are developed through the integration of internal knowledge sources and the organization’s absorptive capacity.
Development of Individual Knowledge	Personalized Career Development	Roles Matched to Individual Strengths Employee autonomy at work	During recruitment and employee development, the focus is not on formal education but on individual potential and talents with long-term relevance for the company.
	Internal Mobility Opportunities	Support for Cross-Department Transfers	When management or an employee identifies that their competencies and interests are better suited to a position in another department, a transfer is arranged in consultation with the HR department.
	Unlimited Education Budget	Continuous learning without budget restrictions	The company aligned its business objectives with employee development, enabling the establishment of an unlimited training budget aimed at building a highly skilled and committed workforce. Employees typically participate in five to ten days of training per year.
External Sources of Information	Academic Partnerships	Collaborations with universities	This ensures continuous interaction with academic knowledge, creating a fertile environment for fresh ideas and diverse perspectives
	Customer Engagement	Regular customer visits for real-time market insights	This represents the most effective form of experiential learning, as it provides real-time insights into market needs and supports the identification of future directions in product development.
Employees’ Welfare	Work–Life Balance	Flexible Schedules	Employees adapt their working hours to their individual biorhythms and life circumstances, fostering greater commitment and creativity.
	Health and Welfare	Strategy and long-term commitment to well-being	The company’s health and well-being initiatives are aligned with the ESG framework and corresponding management systems. These efforts extend beyond the physical workplace to encompass sports, social activities, and other forms of engagement, with an emphasis on personalized programs.

Source: Own elaboration, 2025.

). These mechanisms act as micro-foundations of innovation capability by shaping daily learning, knowledge exchange, and coordinated work practices. Interviewees consistently described these processes as part of “everyday collaboration and learning within teams,” where task allocation and knowledge are continuously adjusted through mutual support. This indicates that learning is embedded in routine work rather than treated as a separate activity.

The development of employees is influenced by a variety of individual characteristics, values, and personal potential. These factors were linked by participants to growth, engagement and performance in the workplace. Several interviewees emphasized that diverse life experiences—such as sports, creativity, and volunteering—contribute to discipline, problem-solving, and teamwork. As the Investment Specialist noted, “Without innovativeness, education, and care for people, there is no sustainable development of the company.” This perspective is underpinned by the notion that innovation capability is contingent on both technical expertise and people-centred development. Accordingly, human capital is regarded not merely as a resource but as the basis for long-term innovation capability.

Motivation is closely linked to strategy through a monthly productivity-based variable salary, which cultivates a sense of shared ownership. As the Head of Production noted, “This creates the mentality that we earn the award ourselves… because we have a common goal.” This finding suggests that rewards are perceived collectively rather than individually, thereby reinforcing shared accountability. Such shared accountability generates intrinsic motivation, a sense of collective purpose, and a reinforcing feedback loop between performance and engagement.

Employees acquire versatile, cross-domain skills through continuous training and cross-functional teamwork, enabling flexible task allocation and continuous improvement. As the Head of Software Development emphasized, “No one is limited to one type of task; everyone understands different processes within the team.” This highlights a culture of openness, skill diversification, and mutual support. New employees undergo a structured onboarding process—including a two-week internal academy—followed by a three-month mentorship. As interviewees explained, mentors remain available beyond the initial period, ensuring ongoing support and accelerating learning curves. This sustained mentorship reinforces continuous learning and reduces onboarding-related performance gaps.

The company places significant emphasis on knowledge sharing and knowledge retention, treating both as fundamental to a culture of continuous learning. Training is provided without budgetary constraints, as the HR Manager explained: “We do not have a fixed training budget; when knowledge is needed, training is approved.” This reflects a demand-driven approach to learning that supports rapid competency development when needed rather than according to predefined financial limits. Internal mobility further acts as a development mechanism allowing employees to cultivate their skills across roles. As the Head of Development noted, “If someone no longer wants to work in development after three years, they can move to project management or production.” This flexibility allows employees to realign their roles with evolving interests and competencies rather than being bound to a single career track.

Together, these practices form self-reinforcing learning cycles that strengthen the organization’s innovation capability by linking individual empowerment with collective learning and innovation performance. Sustainable leadership activates these cycles by encouraging autonomy, continuous development, and collaborative problem-solving across teams.

4.2. Conceptual Framework of Findings

As illustrated in Figure 3, the empirical pathways through which sustainable leadership fosters innovation capability in a high-tech context are synthesized based on evidence from in-depth qualitative data. The framework is organized around three interconnected and mutually reinforcing dimensions: Sustainable Leadership, Organizational Enabling Mechanisms, and Innovation Capability—each functioning as part of a dynamic feedback system. Mechanisms highlighted in bold represent empirically salient practices identified consistently across data sources, providing an evidence-based foundation for adapting and contextualizing the model.

The leadership dimension encompasses interrelated practices such as long-term strategic thinking, participative governance, cultural alignment, and sensemaking. Together, these practices guide how innovation is interpreted, supported, and enacted across organizational levels. This is evidenced by the 100% employee ownership model and by systemic feedback practices such as accessible management and cross-level communication. The model therefore conceptualizes leadership as both a cognitive and relational process that aligns values, vision, and systems across organizational levels [9,15], while our findings empirically demonstrate how this alignment is operationalized through everyday decision-making and feedback mechanisms.

These leadership dynamics activate organizational mechanisms that translate strategic intent into operational innovation capability. These mechanisms include agile structures (e.g., SAFe), knowledge-sharing processes (supported by unlimited training access and continuous mentorship), digital transparency tools (e.g., the Integrated ERP system), and developmental HR practices that foster psychological safety and well-being. Together, these mechanisms act as mediating structures between leadership philosophy and tangible innovation outcomes [14,18], embedding sustainability principles into daily routines, decision-making processes, and collaborative problem-solving.

The interaction among these dimensions forms a self-reinforcing and adaptive system, in which leadership behaviours both shape and are shaped by organizational learning and innovation outcomes. Key outcomes include a capacity for both structured and open ideation, as well as the use of employee well-being as an innovation driver. Examples include flexible work arrangements and a reward system explicitly tied to innovation efforts. This bidirectional relationship reflects a dynamic capability [18,57], forming a continuous learning cycle that strengthens the organization’s capacity for adaptation, renewal, and long-term resilience [13]. Conceptually, this system can be described as a co-evolutionary dynamic feedback loop in which sustainable leadership, organizational mechanisms, and innovation capability continuously adapt to one another. Rather than a linear cause-and-effect process, these dimensions evolve through mutual interdependence, each shaping and being shaped by the others as the organization responds to internal and external change.

Unlike previous conceptual models that examine these dimensions separately, this framework explains how leadership-based values and routines translate into cross-level learning processes which accumulate into innovation capability. Instead of relying on a linear causal interpretation, the findings highlight a co-evolutionary dynamic in which system-level outcomes reshape leadership behaviours and organizational mechanisms over time.

Based on an empirically rich in-depth case, the framework offers a theoretically grounded and empirically substantiated model that clarifies how sustainable leadership mechanisms cultivate innovation capability and organizational resilience in dynamic, technology-driven environments. It bridges the gap between normative models of sustainable leadership and their operationalization in practice [58], offering a multi-level perspective that informs both future research and managerial application.

5. Discussion

This study contributes to research that recognizes innovation capability as a foundation of long-term competitiveness (e.g., [1,21,23]) by offering a systems-based explanation of how sustainable leadership enables innovation capability. The findings reveal that leadership mechanisms, organizational structures, and individual practices co-evolve through reinforcing and balancing dynamics, rather than operating as linear drivers of innovation (e.g., [13,15]). While strong alignment across levels supports innovation capability, interviewees also reported tensions related to autonomy, guidance, and short-term performance pressures. These dynamics suggest that innovation capability in sustainability-oriented organizations emerges from ongoing negotiation between stability and experimentation, extending systems-based perspectives on organizational learning and adaptation (e.g., [13,18]).

5.1. Theoretical Implications

The present study examines how sustainable leadership shapes innovation capability across interconnected organizational levels, responding to recent calls for a more integrated understanding of these constructs (e.g., [1,4]). It offers an empirically grounded systems-based explanation of their interdependence. Previous studies have examined leadership, innovation, and sustainability as parallel rather than interdependent constructs (e.g., [1,13]), offering limited insight into how these dimensions interact as a unified system. By integrating these perspectives, the study extends existing theory by identifying how mechanisms such as employee ownership, iterative planning, and safety-driven improvement function as system-level coordinators that translate leadership values into innovation capability.

While earlier studies have outlined determinants of innovation capability (e.g., [21,23]), our findings highlight its dynamic, relational, and context-sensitive nature, manifested in practices such as cross-functional knowledge exchange, mentoring-based onboarding, and digital feedback cycles (e.g., ERP and idea forums). This is in accordance with the perspective of innovation capability as feedback-driven (e.g., [13,18]). Furthermore, the analysis demonstrates how these feedback dynamics are activated through sustainability-oriented leadership. This leadership establishes alignment between strategic intent and organizational mechanisms, while simultaneously cultivating daily learning behaviours. By addressing this conceptual gap, the study advances theoretical understanding of how sustainability-oriented leadership interacts with innovation capability across multiple organizational levels [1,15]. The findings specify how these interactions materialize through concrete organizational and functional mechanisms. The study introduces an integrative systems-based framework that conceptualizes sustainable leadership and innovation capability as mutually reinforcing subsystems connected through recursive feedback loops. This clarifies how leadership values translate into organizational and functional mechanisms that enable innovation.

From a systems perspective, the findings empirically support arguments that leadership operates as a coordinating mechanism shaping organizational culture, routines, and learning [13,15] through alignment rather than directive control. This coordinating role becomes visible through practices such as the 100-year strategy, the employee-ownership model, and mentoring-based onboarding. The analysis reveals reciprocal feedback across levels, whereby strategic choices shape organizational routines and individual behaviours [13,57,59]. Conversely, bottom-up learning and experimentation refine strategic direction through adaptive SAFe cycles and weekly idea forums that feed experiential knowledge back into planning.

At the strategic level, the study extends existing work on stewardship and long-term orientation in sustainable leadership [15] by identifying how sustainability principles are translated into innovation strategy through concrete governance and ownership mechanisms. This empirical contribution complements prior research on sustainability-oriented innovation [1] and strategic determinants of innovation capability [23], showing how intergenerational responsibility and shared ownership inform innovation roadmaps and decision horizons.

At the organizational level, the study complements prior work on structural and processual enablers of innovation [13,21] by demonstrating how sustainability-oriented leadership cultivates a balance between adaptability and strategic alignment. This extends resilience research [58] by clarifying how leadership-driven systems—such as iterative planning, digital transparency, and mentoring-based skill transfer—stabilize learning while maintaining experimentation, thereby reinforcing organizational resilience.

At the functional level, the study contributes to microfoundations literature by showing how individual-level mechanisms—such as well-being, shared responsibility, and knowledge sharing—support innovation capability ([12,17,18]). It addresses the limited integration of well-being into innovation capability frameworks despite evidence of its importance [6,10], demonstrating that psychological safety and employee care act not only as HR principles but as drivers of innovation performance.

The study extends prior work on co-ownership and shared responsibility [60] by demonstrating how these mechanisms interact with organizational culture and digital infrastructures to strengthen innovation capability [61,62]. It conceptualizes these interactions as coordination mechanisms that support shared decision-making, transparency, and distributed idea development across the organization. These findings advance theorization of innovation capability as a continuously renewing system driven by feedback-based learning and shared accountability.

While recent research emphasizes internal dynamics such as knowledge overlap and connected inventor networks [63], this study extends these insights by identifying openness and ethical conduct as relational mechanisms that underpin innovation capability. Rather than functioning merely as knowledge-sharing practices, these mechanisms operate as relational infrastructures that enable trust-based collaboration and systemic innovation capability [1,64].

Collectively, these insights position sustainable leadership as a dynamic capability that coordinates structural enablers, learning mechanisms, and cultural attributes. Through this coordinating function, sustainable leadership supports continuous innovation and long-term organizational resilience by aligning strategic intent with organizational and functional learning processes [18,47]. The integration of leadership, organizational enablers and innovation outcomes within a unified systems framework represents a theoretical advancement of extant models of sustainable leadership [15] and innovation capability [3,13]. It specifies the interdependent mechanisms that link these domains, moving beyond descriptive accounts toward an empirically grounded explanation of how innovation capability emerges. This systems-based perspective provides a theoretical foundation for future research on how dynamic capabilities emerge, stabilize, and evolve within innovation-intensive organizations.

5.2. Practical Implications

This study identifies a set of interrelated leadership and organizational practices that jointly strengthen innovation capability and sustainability, offering practical guidance for leaders seeking to embed innovation within long-term organizational development. From a systems perspective, leaders should deliberately align strategic priorities with structural enablers and daily learning behaviours, rather than addressing each dimension separately. Such alignment creates organizational coherence, strengthening adaptability and innovation resilience in volatile and rapidly changing environments [57,58]. This implies that organizational resilience is not a by-product of innovation initiatives but a capability that leaders must actively cultivate. These insights correspond directly to the mechanisms delineated in the SFSIC framework, thereby facilitating the translation of its theoretical concepts into actionable managerial practices. They illustrate how sustainable leadership can intentionally coordinate organizational enablers and learning systems. This demonstrates that innovation capability can be developed not only through strategic vision but also through the explicit design of everyday routines and structures.

Organizations can strengthen innovation capability by adopting mechanisms such as employee ownership, particularly when accompanied by shared decision rights and long-term incentives that foster engagement, knowledge retention, and alignment with innovation goals. Participative strategic planning further reinforces this engagement by allowing employees to co-shape priorities, strengthening a shared sense of purpose and increasing commitment to innovation decisions across organizational levels. Together, these mechanisms create a cultural and structural foundation that supports experimentation, knowledge sharing, and sustained innovation throughout the organization.

At the operational level, agile coordination mechanisms—such as iterative planning and review cycles—can align teams with strategic objectives, increasing responsiveness and accelerating continuous improvement cycles. Targeted R&D investments and cross-boundary collaboration—with internal functions and external partners such as startups, universities, and customers—expand organizational knowledge and widen the opportunity space for innovation. Sustainable leadership should deliberately orchestrate these cross-boundary learning systems by setting shared priorities, coordinating knowledge flows, and ensuring that external insights are absorbed into internal routines, thereby strengthening absorptive capacity and accelerating learning and innovation [14,18].

Organizations aiming to strengthen innovation capability should institutionalize mechanisms for continuous learning and feedback, enabling innovation processes to improve through iterative refinement rather than ad hoc decision-making. This requires integrating measurable sustainability objectives into the product lifecycle so that sustainability priorities function as feedback constraints guiding innovation decisions. Leaders can support this process by linking innovation initiatives to clear environmental and social metrics, thereby translating sustainability principles into measurable and actionable practices.

Collectively, these insights demonstrate how strategic foresight, participative culture, and cross-boundary collaboration reinforce each other through shared learning processes, enhancing both innovation capability and organizational resilience. In practice, leaders should cultivate feedback systems that connect strategic vision with daily learning cycles by coordinating reporting routines, decision rules, and shared accountability mechanisms. Such systems enable innovation to self-correct, adapt, and evolve over time.

To complement these systemic implications, the study provides level-specific recommendations for practice.

Table 7. Practical implications for strengthening innovation capability across system levels.

Level	Practical Implications
Strategic level	• Embed a shared long-term vision that guides operational and daily decisions. • Use participative strategy processes involving employees in priority-setting. • Reinforce commitment through employee ownership or shared-goal systems. • Balance exploration and exploitation by selectively scaling and using external partners. • Develop structured partnership portfolios (startups, academia, customers).
Organizational level	• Implement agile planning cycles (10–12 weeks) with stable priorities. • Use integrated information systems to reduce silos and align functions. • Institutionalize idea-management routines (weekly forums, digital pipelines). • Apply dual structures (stable leadership + rotating agile teams) to maintain responsiveness. • Strengthen learning infrastructures via cross-functional meetings and feedback loops.
Functional level	• Personalize development pathways based on strengths and values. • Use structured onboarding and mentorship for rapid learning and assimilation. • Encourage daily collaboration through stand-ups and joint problem-solving. • Reinforce intrinsic motivation through productivity-based shared rewards. • Support employee well-being (flexibility, autonomy, supportive climate) to foster creativity.

Source: Own elaboration, 2025.

summarizes actionable implications at the strategic, organizational, and functional levels, offering a structured guide for applying the SFSIC framework.

In addition to these level-specific recommendations, the SFSIC framework can be further operationalized through concrete interventions that support both short-term improvement and long-term capability development.

Table 8. Practical implications and recommendations for innovation capability development.

Innovation Capability Category	Short-Term Interventions	Long-Term Strategies
Strategy and Vision	• Facilitate inclusive vision workshops. • Pilot employee-ownership mechanisms. • Introduce focused R&D budgeting. • Align partnerships for co-creation with key stakeholders. • Adopt objective-driven planning cycles.	• Institutionalize a long-term, sustainability-driven strategic vision (e.g., a “100-Year Plan”). • Strategically leverage employee ownership structures. • Sustain high levels of R&D investment. • Scale hybrid business models supported by transparent performance metrics. • Maintain organizational agility while strengthening ecosystem partnerships.
Leadership Practices	• Promote open and accessible leadership with continuous feedback. • Embed employee voices in strategic discussions. • Use recognized compliance and quality frameworks as learning tools. • Train leaders in authentic and empathetic communication.	• Develop leadership paradigms centred on trust, accessibility, and values-based improvement. • Institutionalize inclusive, values-based strategy formulation across organizational levels.
Supporting Culture	• Encourage experimentation through discovery-driven innovation. • Implement transparent communication practices. • Recognize meaningful innovation contributions. • Reinforce autonomy and psychological safety.	• Cultivate a resilient innovation culture embracing failure, psychological safety, and transparency. • Align values, behaviours, and incentives across levels. • Embed well-being indicators into performance systems. • Establish structured innovation recognition programs.
Processes and Tools for Idea Management	• Deploy digital systems for capturing and evaluating ideas. • Foster collaborative forums for joint problem-solving. • Combine structured and emergent innovation approaches. • Offer training in agile scaling practices. • Promote cross-sector learning through startup collaborations and accelerators.	• Institutionalize organization-wide idea-management routines. • Formalize Agile/Lean innovation frameworks. • Leverage cross-disciplinary teams to integrate in-house knowledge. • Build an open-innovation ecosystem connecting internal capabilities with external innovators.
Technology Management	• Roll out modular digital systems. • Integrate R&D, manufacturing, and quality functions. • Assess opportunities for automation. • Implement feedback-driven product development.	• Fully integrate design-to-delivery operations supported by advanced digital systems. • Embed automation and real-time data analytics into decision-making. • Institutionalize quality management as a driver of early-stage innovation and continuous improvement.
Employees	• Implement structured onboarding and mentorship programs. • Match roles to individual strengths and values. • Expand flexible work arrangements. • Foster cross-departmental teamwork. • Pilot well-being surveys linked to creativity and innovation. • Promote academic and customer co-learning.	• Institutionalize personalized career pathways and internal mobility. • Provide continuous, open access to learning budgets aligned with strategic needs. • Embed ESG-aligned well-being programs into HR systems. • Link well-being and innovation indicators within performance management. • Formalize ongoing academic, customer, and ecosystem collaborations as innovation inputs.

Source: Own elaboration, 2025.

summarizes these implications by translating the study’s findings into actionable guidance for organizations seeking to strengthen innovation capability in dynamic, high-tech environments.

5.3. Limitations and Future Research Directions

While this study offers in-depth insights from a single case, its focus on one high-performing, innovation-driven company limits the generalizability of the findings, which is a recognized trade-off in theory-building research. Future research could adopt multi-case or comparative designs across diverse sectors to validate and extend the framework developed here. Such cross-contextual analysis would clarify the conditions under which sustainable leadership mechanisms vary or remain consistent across distinct institutional, cultural, and technological environments. In particular, comparative studies between manufacturing and service-oriented high-tech firms could reveal contextual contingencies that influence the relationship between leadership, culture, and innovation capability.

Incorporating quantitative or mixed-method approaches could strengthen the robustness of results through statistical validation and methodological triangulation, particularly by measuring the relative influence of specific leadership mechanisms on innovation outcomes. Longitudinal research designs would further capture the evolution of innovation capability and leadership practices over time, offering deeper insight into their dynamic and self-reinforcing nature. System dynamics modelling could also help simulate feedback loops linking leadership decisions, innovation outcomes, and organizational resilience [58], offering a powerful tool for hypothesis testing and theoretical refinement.

This study principally addresses internal organizational factors; however, future research could further explore external influences, including market conditions and environmental regulations. Further examination of digital transformation, sustainability, and leadership practices is likewise warranted, ideally through ecosystem-based or inter-organizational analyses, as these areas are increasingly interdependent yet remain underexplored from a systems perspective.

Finally, integrating qualitative insights with big data analytics could offer a real-time and multi-level understanding of how organizations adapt within complex ecosystems. Such integration could advance systems-based theories of organizational resilience and dynamic capabilities, demonstrating that sustainable leadership is a core driver of adaptive innovation in dynamic and uncertain environments.

6. Conclusions

This study identified and illustrated the key systemic mechanisms underlying the development of innovation capability in high-tech organizations, with a particular focus on sustainable leadership. Sustainable leadership—characterized by collaborative decision-making, shared responsibility, and transparent communication—fosters innovation by cultivating a long-term strategic perspective and embedding sustainability values into everyday organizational practices. In relation to RQ2, the findings demonstrate that sustainable leadership functions as a systemic coordination mechanism that aligns strategic intent, organizational routines, and daily knowledge practices through feedback processes that translate long-term values into operational capability. This leadership approach enables a culture of experimentation, continuous learning, and adaptive innovation supported by strong internal and external knowledge networks.

The proposed SFSIC framework further clarifies that innovation capability—as examined in RQ1—is not a static organizational attribute or a list of determinants, but an emergent system property generated through the coupling of leadership intent, enabling structures, and functional learning. Innovation capability therefore arises across organizational levels rather than from isolated practices or tools.

Beyond advancing theory, the study offers actionable pathways for strengthening innovation systems by linking leadership development, organizational design, and employee empowerment. The SFSIC framework provides practical guidance for cultivating resilience, agility, and ethical value creation in organizations facing technological and societal transformation. It highlights a co-evolutionary dynamic in which leadership, systems, and innovation continuously reinforce one another, positioning sustainable leadership as a core driver of adaptive, capability-based innovation.