Green Innovation, Corporate Social Responsibility and Sustainable Development

Dear Colleagues,

The assimilation of green innovation and corporate social responsibility is necessary to abide by environmental regulations and obtain competitive advantages in the marketplace. Companies are demonstrating these sustainable development practices to maintain their stores’ marketing practices as socially and environmentally responsible. Companies can work to align their economic activities in an ecological context in numerous ways, and the extent to which companies can connect with their consumers using sustainable development practices is paramount.

In particular, the junction of green innovation, corporate social responsibility (CSR), and sustainable development is recognized as vital for firms' economic performance and environmental sustainability. As the environmental agenda is being taken seriously in every corner of the planet, it also lays the groundwork for developing and implementing sustainable strategies in a corporate environment, and standardising that across the organisation. This literature synthesis will review recent scholarship that focuses on the three areas of green innovation, CSR, and sustainable development.

Green innovation is defined as producing services, processes, or products with as little environmental damage as possible while maximising performance and efficiency. Recent research has shown that green innovation is essential to sustainable development in corporate endeavours. All in all, Chen et al. argue that by adopting an initiative for green innovation, firms are likely to obtain greater reputational advantages and contribute to lower operational costs by not only embracing these values but also addressing environmental issues (Begum et al., 2021). Wong et al. have similar opinions, demonstrating that integrating green supply chain processes with innovation can benefit the environment while positively impacting cost efficiencies (Wong et al., 2020). There is a heightened emphasis on green innovation, particularly in small- to medium-sized firms (SMEs), wherein the structuring of entrepreneurial orientation remains critical. According to Muangmee et al., SMEs can engage in sustainable entrepreneurial orientation (SEO) for a large part of their innovative ability while improving sustainable business capabilities (Muangmee et al., 2021). This finding demonstrates the proximity of green innovation to the strategic goals of firms, as well as the correlation of a firm’s innovation program with a green agenda.

Meanwhile, the funding of corporate green practices has been debated. Xiang et al. identified stakeholders that provide funding for green innovation activities, with institutional investors being especially prevalent (Xiang et al., 2022). This highlights the need for a more aligned financial strategy directed to green project activity, which has the potential to enable wider value to society through enhanced sustainability outcomes.

Moreover, the governing framework and incentives that governments create indirectly encourage green innovation. In their study, Song et al. found that environmental regulations and R&D tax incentives were considerable leveraging factors in support of green product innovation (Song et al., 2020). The incentivization of innovation promotes economic space and encourages companies to advance sustainable practices and technologies developed from innovation.

Growing research has recognized knowledge management capabilities and organizational learning as predictors of support for environmentally based innovation. Wang et al. found that the relationship of green absorptive capacity, which is a combination of organizational learning, with knowledge creation processes is required for the company to convert green entrepreneurial orientation into green innovations (Wang et al., 2022). This relationship signifies that a firm must build internal capabilities to exploit its innovative potential and sustainable practices.

In addition, digital transformation plays a considerable role in increasing the potential for green innovation. Gao et al. illustrate that with the increase of digitalization, firms can incorporate innovative solutions to curb environmental effects while financially benefiting (Gao et al., 2023). The evolution of technology can assist firms in streamlining operations to more sustainable processes.

Research topics to be examined

The following main topics are to be examined in this SI

1. Drivers and Enablers of Green Innovation

The drivers of green innovation will be considered, including regulatory drivers such as environmental policy and R&D tax credits, as shown by Song et al. (2020). The influence of stakeholders in sustainable procurement funding models, and the influence of institutional investor funding, as presented by Xiang et al. (2022), will be investigated. In addition, attention to the drivers of digital transformation for improving green innovation (Gao et al., 2023) and organizational learning and related absorptive capacities (Wang et al., 2022) will be part of the discussion.

2. Corporate Social Responsibility (CSR) and Sustainable Business Practices

CSR initiatives and the connections to sustainable development are to be considered as well, including opportunities to utilize the benefits of reputation and efficiency of operations. The topics of inquiry will also cover elements of green supply chain management (Wong et al., 2020) and the significance of sustainable entrepreneurial orientation, particularly from SMEs (Muangmee et al., 2021). This topic trend will deal with leadership and creative engagement means, including green transformational leadership that effectuates CSR-based innovation (Begum et al., 2021).

3. Economic and Environmental Outcomes of Sustainable Strategies

Green innovation and CSR provide environmental benefits and a competitive advantage. We will further explore the generative impacts of economic and social value generated in ways that sustain growth from sustainable practices, with examples like Xiang et al. (2022) in funding models.

We seek to connect this to how firms convert green entrepreneurial orientation into a commercial innovation in relation to studies on innovation like Wang et al. (2022), with implications for cost advantages and environmental performance (Wong et al., 2022).

References

Begum, S., Ashfaq, M., Xia, E., & Awan, U. (2021). Does green transformational leadership lead to green innovation? the role of green thinking and creative process engagement. Business Strategy and the Environment, 31(1), 580-597. https://doi.org/10.1002/bse.2911

Gao, S., Li, W., Meng, J., Shi, J., & Zhu, J. (2023). A study on the impact mechanism of digitalization on corporate green innovation. Sustainability, 15(8), 6407. https://doi.org/10.3390/su15086407

Muangmee, C., Dacko-Pikiewicz, Z., Meekaewkunchorn, N., Kassakorn, N., & Khalid, B. (2021). Green entrepreneurial orientation and green innovation in small and medium-sized enterprises (SMEs). Social Sciences, 10(4), 136. https://doi.org/10.3390/socsci10040136

Song, M., Wang, S., & Zhang, H. (2020). Could environmental regulation and r&d tax incentives affect green product innovation?. Journal of Cleaner Production, 258, 120849. https://doi.org/10.1016/j.jclepro.2020.120849

Wang, C., Zhang, X., & Teng, X. (2022). How to convert green entrepreneurial orientation into green innovation: the role of knowledge creation process and green absorptive capacity. Business Strategy and the Environment, 32(4), 1260-1273. https://doi.org/10.1002/bse.3187

Wong, C., Wong, C., & Boon‐itt, S. (2020). Effects of green supply chain integration and green innovation on environmental and cost performance. International Journal of Production Research, 58(15), 4589-4609. https://doi.org/10.1080/00207543.2020.1756510

Xiang, X., Liu, C., & Yang, M. (2022). Who is financing corporate green innovation?. International Review of Economics & Finance, 78, 321-337. https://doi.org/10.1016/j.iref.2021.12.011

Dr. Christos Lemonakis
Guest Editor

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• green innovation
• corporate social responsibility (CSR)
• sustainable business practices
• sustainable strategies