Skip to main content

Sustainability Orientation, Green Supplier Involvement, and Green Innovation Performance: Evidence from Diversifying Green Entrants

Abstract

While green innovation has a positive impact on firms’ performance, some established firms that initiate green innovation activities (referring to diversifying green entrants) could suffer from insufficient new green knowledge and skills. Since adopting a sustainability orientation helps firms commit to the creation of superior sustainable practices, and efficiently invest resources necessary to develop appropriate new green products, leading to superior green innovation performance, sustainability orientation offers an alternative approach for diversifying green entrants to achieve green innovation success. Building on resource-based, knowledge-based, and capabilities theories, this study aims to identify key factors that enable sustainability orientation of diversifying green entrants and enhance its effect on green innovation performance. As sustainability issues frequently occur upstream at the supplier level, and since supplier involvement effectively determines new product success, this study theorizes that diversifying green entrants that adopt sustainability orientation require two types of green supplier involvement (as a knowledge source and a co-creator) to enhance the effect of sustainability orientation on green innovation performance. Green knowledge-processing capability and green R&D capability complement green supplier involvement as a knowledge source and green supplier involvement as a co-creator, respectively, to further enhance the amount of green innovation performance. Based on a longitudinal dataset of 336 diversifying green entrants, the results support all our hypotheses. Interestingly, an additional analysis suggests that when diversifying green entrants implement green supplier involvement as a co-creator, they achieve greater green innovation performance than those who implement green supplier involvement as a knowledge source. These findings provide important theoretical implications and practical guidance for established firms to pursue green innovation.

This is a preview of subscription content, access via your institution.

Fig. 1
Fig. 2
Fig. 3
Fig. 4

Notes

  1. Diversifying green entrants are different from green start-ups, for which survival and growth-related practices are embedded in green technologies and capabilities when founded.

  2. The authors thank one of the JBE reviewers for this helpful suggestion.

  3. One-step process: both the measurement and structural effects are simultaneously estimated (Fornell and Yi 1992). Two-step process: step 1 is to estimate the measurement model with no structural effects using confirmatory factor modeling. Step 2 is to estimate the structural section of the model using the results from step 1.

References

  • Adams, R., Jeanrenaud, S., Bessant, J., Denyer, D., & Overy, P. (2016). Sustainability-oriented innovation: A systematic review. International Journal of Management Reviews, 18(2), 180–205.

    Google Scholar 

  • Adner, R., & Helfat, C. (2003). Corporate effects and dynamic managerial capabilities. Strategic Management Journal, 24(10), 1011–1025.

    Google Scholar 

  • Amit, R., & Schoemaker, P. (1993). Strategic assets and organizational rent. Strategic Management Journal, 14(1), 33–46.

    Google Scholar 

  • Anderson, J., & Gerbing, D. (1988). Structural equation modeling in practice: A review and recommended two-step approach. Psychological Bulletin, 103, 411–423.

    Google Scholar 

  • Andersson, U., Forsgren, M., & Holm, U. (2002). The strategic impact of external networks: Subsidiary performance and competence development in the multinational corporation. Strategic Management Journal, 23(11), 979–996.

    Google Scholar 

  • Barney, J. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17, 99–120.

    Google Scholar 

  • Bayus, B., & Agarwal, R. (2007). The role of pre-entry experience, entry timing, and product technology strategies in explaining firm survival. Management Science, 53(12), 1887–1902.

    Google Scholar 

  • Beers, C., & Zand, F. (2014). R&D cooperation, partner diversity, and innovation performance:An empirical analysis. Journal of Product Innovation Management, 31(2), 292–312.

    Google Scholar 

  • Berchicci, L. (2013). Towards an open R&D system: Internal R&D investment, external knowledge acquisition and innovative performance. Research Policy, 42(1), 117–127.

    Google Scholar 

  • Berman, S., Wicks, A., Kotha, S., & Jones, T. (1999). Does stakeholder orientation matter? The relationship between stakeholder management models and firm financial performance. Academy of Management Journal, 42(5), 488–506.

    Google Scholar 

  • Calic, G., & Mosakowski, E. (2016). Kicking off social entrepreneurship: How a sustainability orientation influences crowdfunding success. Journal of Management Studies, 53(5), 738–767.

    Google Scholar 

  • Chandler, G., & Hanks, S. (1998). An examination of the substitutability of founders human and financial capital in emerging business ventures. Journal of business venturing, 13(5), 353–369.

    Google Scholar 

  • Chang, Y., Chang, H., Chi, H., Chen, M., & Deng, L. (2012). How do established firms improve radical innovation performance? The organizational capabilities view. Technovation, 32(7), 441–451.

    Google Scholar 

  • Chen, C., Tseng, M., Lin, Y., & Lin, Z. (2010). Implementation of green supply chain management in uncertainty. In IEEE international conference on industrial engineering and engineering management (IEEM) (pp. 260–264).

  • Chen, Y. (2008). The driver of green innovation and green image–green core competence. Journal of Business Ethics, 81(3), 531–543.

    Google Scholar 

  • Chen, Y., Lai, S., & Wen, C. (2006). The influence of green innovation performance on corporate advantage in Taiwan. Journal of Business Ethics, 67, 331–339.

    Google Scholar 

  • Cheng, C., & Huizingh, E. (2014). When is open innovation beneficial? The role of strategic orientation. Journal of Product Innovation Management, 31(6), 1235–1253.

    Google Scholar 

  • Child, J., & Tsai, T. (2005). The dynamic between firms’ environmental strategies and institutional constraints in emerging economies: Evidence from China and Taiwan. Journal of Management Studies, 42(1), 95–125.

    Google Scholar 

  • China Credit Information Service (2013). 2013 Business groups in Taiwan. Taipei: China Credit Information Service.

    Google Scholar 

  • Churchill, G. Jr. (1979). A paradigm for developing better measures of marketing constructs. Journal of Marketing Research, 64–73.

    Google Scholar 

  • Claudy, M., Peterson, M., & Pagell, M. (2016). The roles of sustainability orientation and market knowledge competence in new product development success. Journal of Product Innovation Management, 33(S1), 72–85.

    Google Scholar 

  • Cohen, J., Cohen, P., West, S., & Aiken, L. (2003). Applied multiple correlation/regression analysis for the behavioral sciences. Milton Park: Taylor & Francis.

  • Cronin, J. Jr., Smith, J., Gleim, M., Ramirez, E., & Martinez, J. (2011). Green marketing strategies: An examination of stakeholders and the opportunities they present. Journal of the Academy of Marketing Science, 39, 158–174.

    Google Scholar 

  • Damanpour, F. (1991). Organizational innovation: A meta-analysis of effects of determinants and moderators. Academy of Management Journal, 34(3), 555–590.

    Google Scholar 

  • Dangelico, R., Pontrandolfo, P., & Pujari, D. (2013). Developing sustainable new products in the textile and upholstered furniture industries: Role of external integrative capabilities. Journal of Product Innovation Management, 30(4), 642–658.

    Google Scholar 

  • Dangelico, R., & Pujari, D. (2010). Mainstreaming green product innovation: Why and how companies integrate environmental sustainability. Journal of business ethics, 95(3), 471–486.

    Google Scholar 

  • Danneels, E. (2004). Disruptive technology reconsidered: A critique and research agenda. Journal of Product Innovation Management, 21(4), 246–258.

    Google Scholar 

  • de Ruyter, k, de Jong, A., & Wetzels, M. (2009). Antecedents and consequences of environmental stewardship in boundary-spanning b2b teams. Journal of the Academy of Marketing Science, 37(4), 470–487.

    Google Scholar 

  • Denrell, J., Fang, C., & Winter, S. (2003). The economics of strategic opportunity. Strategic Management Journal, 24(10), 977–990.

    Google Scholar 

  • Donaldson, L. (2001). The contingency theory of organizations. Thousand Oaks: Sage.

    Google Scholar 

  • Douglas, S., & Craig, C. (2007). Collaborative and iterative translation: An alternative approach to back translation. Journal of International Marketing, 15(1), 30–43.

    Google Scholar 

  • Du, S., Yalcinkaya, G., & Bstieler, L. (2016). Sustainability, social media driven open innovation, and new product development performance. Journal of Product Innovation Management, 33(S1), 55–71.

    Google Scholar 

  • Ehrgott, M., Reimann, F., Kaufmann, L., & Carter, C. (2011). Social sustainability in selecting emerging economy suppliers. Journal of Business Ethics, 98(1), 99–119.

    Google Scholar 

  • Eisenhardt, K., & Martin, J. (2000). Dynamic capabilities: What are they? Strategic Management Journal, 21(10–11), 1105–1121.

    Google Scholar 

  • Eisenhardt, K., & Santos, F. (2002). Knowledge-based view: A new theory of strategy. Handbook of Strategy and Management, 1, 139–164.

    Google Scholar 

  • Fornell, C., & Larcker, D. (1981). Evaluating structural equation models with unobservable variables and measurement error. Journal of Marketing Research, 39–50.

  • Fornell, C., & Yi, Y. (1992). Assumptions of the two-step approach to latent variable modeling. Sociological Methods & Research, 20(3), 291–320.

    Google Scholar 

  • Fraj-Andrés, E., Martinez-Salinas, E., & Matute-Vallejo, J. (2009). A multidimensional approach to the influence of environmental marketing and orientation on the firm’s organizational performance. Journal of Business Ethics, 88(2), 263–286.

    Google Scholar 

  • Ganco, M., & Agarwal, R. (2009). Performance differentials between diversifying entrants and entrepreneurial start-ups: A complexity approach. Academy of Management Review, 34(2), 228–252.

    Google Scholar 

  • Gatignon, H., & Xuereb, J. (1997). Strategic orientation of the firm and new product performance. Journal of Marketing Research, 77–90.

  • Gerbing, D., & Anderson, J. (1988). An updated paradigm for scale development incorporating unidimensionality and its assessment. Journal of Marketing Research, 186–192.

  • Gimenez, C., & Tachizawa, E. (2012). Extending sustainability to suppliers: A systematic literature review. Supply Chain Management: An International Journal, 17(5), 531–543.

    Google Scholar 

  • Gmelin, H., & Seuring, S. (2014). Determinants of a sustainable new product development. Journal of Cleaner production, 69, 1–9.

    Google Scholar 

  • González-Benito, J., & González-Benito, Ó (2005). Environmental proactivity and business performance: An empirical analysis. Omega, 33(1), 1–15.

    Google Scholar 

  • Grant, R. (1996). Toward a knowledge-based theory of the firm. Strategic Management Journal, 17, 109–122.

    Google Scholar 

  • Hair, J., Black, W., Babin, B., Anderson, R., & Tatham, R. (2010). Multivariate data analysis (7th edn.). Upper Saddle River, NJ: Prentice Hall.

    Google Scholar 

  • Hakala, H. (2011). Strategic orientations in management literature: Three approaches to understanding the interaction between market, technology, entrepreneurial and learning orientations. International Journal of Management Reviews, 13(2), 199–217.

    Google Scholar 

  • Harmancioglu, N., Droge, C., & Calantone, R. (2009). Strategic fit to resources versus NPD execution proficiencies: What are their roles in determining success? Journal of the Academy of Marketing Science, 37(3), 266–282.

    Google Scholar 

  • Hart, S. (1995). A natural-resource-based view of the firm. Academy of Management Review, 20(4), 986–1014.

    Google Scholar 

  • Heckman, J. (1990). Varieties of selection bias. The American Economic Review, 80(2), 313–318.

    Google Scholar 

  • Helfat, C., & Winter, S. (2011). Untangling dynamic and operational capabilities: Strategy for the (N) ever-changing world. Strategic Management Journal, 32(11), 1243–1250.

    Google Scholar 

  • Hillman, A., Withers, M., & Collins, B. (2009). Resource dependence theory: A review. Journal of Management, 35(6), 1404–1427.

    Google Scholar 

  • Hockerts, K., & Wüstenhagen, R. (2010). Greening Goliaths versus emerging Davids—Theorizing about the role of incumbents and new entrants in sustainable entrepreneurship. Journal of Business Venturing, 25(5), 481–492.

    Google Scholar 

  • Hoskisson, R., Eden, L., Lau, C., & Wright, M. (2000). Strategy in emerging economies. Academy of Management Journal, 43(3), 249–267.

    Google Scholar 

  • Isaksson, O., Simeth, M., & Seifert, R. (2016). Knowledge spillovers in the supply chain: Evidence from the high tech sectors. Research Policy, 45(3), 699–706.

    Google Scholar 

  • Jantunen, A. (2005). Knowledge-processing capabilities and innovative performance: An empirical study. European Journal of Innovation Management, 8(3), 336–349.

    Google Scholar 

  • Jean, R., Sinkovics, R., & Hiebaum, T. (2014). The effects of supplier involvement and knowledge protection on product innovation in customer–supplier relationships: A study of global automotive suppliers in China. Journal of Product Innovation Management, 31(1), 98–113.

    Google Scholar 

  • Joshi, A., & Campbell, A. (2003). Effect of environmental dynamism on relational governance in manufacturer-supplier relationships: A contingency framework and an empirical test. Journal of the Academy of Marketing Science, 31(2), 176–188.

    Google Scholar 

  • Klewitz, J., & Hansen, E. (2014). Sustainability-oriented innovation of SMEs: A systematic review. Journal of Cleaner Production, 65, 57–75.

    Google Scholar 

  • Laursen, K., & Salter, A. (2006). Open for innovation: The role of openness in explaining innovation performance among UK manufacturing firms. Strategic Management Journal, 27(2), 131–150.

    Google Scholar 

  • Laursen, L., & Andersen, P. (2016). Supplier involvement in NPD: A quasi-experiment at Unilever. Industrial Marketing Management, 58, 162–171.

    Google Scholar 

  • Lavie, D. (2006). The competitive advantage of interconnected firms: An extension of the resource-based view. Academy of Management Review, 31(3), 638–658.

    Google Scholar 

  • Lawson, B., Krause, D., & Potter, A. (2015). Improving supplier new product development performance: The role of supplier development. Journal of Product Innovation Management, 32(5), 777–792.

    Google Scholar 

  • Li, E., Zhou, L., & Wu, A. (2017). The supply-side of environmental sustainability and export performance: The role of knowledge integration and international buyer involvement. International Business Review, 26(4), 724–735

    Google Scholar 

  • McDougall, P., Oviatt, B., & Shrader, R. (2003). A comparison of international and domestic new ventures. Journal of International Entrepreneurship, 1(1), 59–82.

    Google Scholar 

  • Menguc, B., Auh, S., & Yannopoulos, P. (2014). Customer and supplier involvement in design: The moderating role of incremental and radical innovation capability. Journal of Product Innovation Management, 31(2), 313–328.

    Google Scholar 

  • Moeen, M., & Agarwal, R. (2017). Incubation of an industry: Heterogeneous knowledge bases and modes of value capture. Strategic Management Journal, 38(3), 566–587.

    Google Scholar 

  • Muthén, L., & Muthen, B. (2010). Mplus 6.0. Los Angeles, CA: Muthén & Muthén.

  • Nidumolu, R., Prahald, C., & Rangaswami, M. (2009). Why sustainability if now the key driver of innovation. Harvard Business Review, 87(9), 56–64.

    Google Scholar 

  • Oke, A., Prajogo, D., & Jayaram, J. (2013). Strengthening the innovation chain: The role of internal innovation climate and strategic relationships with supply chain partners. Journal of Supply Chain Management, 49(4), 43–58.

    Google Scholar 

  • Pe’er, A., Vertinsky, I., & Keil, T. (2016). Growth and survival: The moderating effects of local agglomeration and local market structure. Strategic Management Journal, 37(3), 541–564.

    Google Scholar 

  • Peteraf, M., Di Stefano, G., & Verona, G. (2013). The elephant in the room of dynamic capabilities: Bringing two diverging conversations together. Strategic Management Journal, 34(12), 1389–1410.

    Google Scholar 

  • Podsakoff, P., MacKenzie, S., & Podsakoff, N. (2012). Sources of method bias in social science research and recommendations on how to control it. Annual Review of Psychology, 63, 539–569.

    Google Scholar 

  • Ponomariov, B., & Toivanen, H. (2014). Knowledge flows and bases in emerging economy innovation systems: Brazilian research 2005–2009. Research Policy, 43(3), 588–596.

    Google Scholar 

  • Rindfleisch, A., Malter, A., Ganesan, S., & Moorman, C. (2008). Cross-sectional versus longitudinal survey research: Concepts, findings, and guidelines. Journal of Marketing Research, 45(3), 261–279.

    Google Scholar 

  • Roxas, B., & Coetzer, A. (2012). Institutional environment, managerial attitudes and environmental sustainability orientation of small firms. Journal of Business Ethics, 111(4), 461–476.

    Google Scholar 

  • Saldanha, T., Mithas, S., & Krishnan, M. (2017). Leveraging customer involvement for fueling innovation: The role of relational and analytical information processing capabilities. MIS Quarterly, 41(1).

  • Shu, C., Zhou, K., Xiao, Y., & Gao, S. (2016). How green management influences product innovation in China: The role of institutional benefits. Journal of Business Ethics, 133(3), 471–485.

    Google Scholar 

  • Smals, R., & Smits, A. (2012). Value for value—The dynamics of supplier value in collaborative new product development. Industrial Marketing Management, 41(1), 156–165.

    Google Scholar 

  • Teece, D., Pisano, G., & Shuen, A. (1997). Dynamic capabilities and strategic management. Strategic Management Journal, 18, 509–533.

    Google Scholar 

  • Trapp, A., & Sarkis, J. (2016). Identifying robust portfolios of suppliers: A sustainability selection and development perspective. Journal of Cleaner Production, 112, 2088–2100.

    Google Scholar 

  • Un, C., Cuervo-Cazurra, A., & Asakawa, K. (2010). R&D collaborations and product innovation. Journal of Product Innovation Management, 27(5), 673–689.

    Google Scholar 

  • Varadarajan, R. (2014). Toward sustainability: Public policy, global social innovations for base-of-the-pyramid markets, and demarketing for a better world. Journal of International Marketing, 22(2), 1–20.

    Google Scholar 

  • Varadarajan, R. (2017). Innovating for sustainability: A framework for sustainable innovations and a model of sustainable innovations orientation. Journal of the Academy of Marketing Science, 45(1), 14–36.

    Google Scholar 

  • Wilhelm, M., Blome, C., Bhakoo, V., & Paulraj, A. (2016). Sustainability in multi-tier supply chains: Understanding the double agency role of the first-tier supplier. Journal of Operations Management, 41, 42–60.

    Google Scholar 

  • Williams, C., Chen, P., & Agarwal, R. (2017). Rookies and seasoned recruits: How experience in different levels, firms, and industries shapes strategic renewal in top management. Strategic Management Journal, 38(7), 1391–1415.

    Google Scholar 

  • Winship, C., & Mare, R. (1992). Models for sample selection bias. Annual Review of Sociology, 18(1), 327–350.

    Google Scholar 

  • Yam, R., Lo, W., Tang, E., & Lau, A. (2011). Analysis of sources of innovation, technological innovation capabilities, and performance: An empirical study of Hong Kong manufacturing industries. Research Policy, 40(3), 391–402.

    Google Scholar 

  • Yeniyurt, S., Henke Jr, J., & Yalcinkaya, G. (2014). A longitudinal analysis of supplier involvement in buyers’ new product development: Working relations, inter-dependence, co-innovation, and performance outcomes. Journal of the Academy of Marketing Science, 42(3), 291–308.

    Google Scholar 

  • Zhang, W., & White, S. (2016). Overcoming the liability of newness: Entrepreneurial action and the emergence of China’s private solar photovoltaic firms. Research Policy, 45(3), 604–617.

    Google Scholar 

  • Zhang, Y., & Li, H. (2010). Innovation search of new ventures in a technology cluster: The role of ties with service intermediaries. Strategic Management Journal, 31(1), 88–109.

    Google Scholar 

  • Zollo, M., & Winter, S. (2002). Deliberate learning and the evolution of dynamic capabilities. Organization science, 13(3), 339–351.

    Google Scholar 

Download references

Author information

Authors and Affiliations

Authors

Corresponding author

Correspondence to Colin C. J. Cheng.

Ethics declarations

Ethical approval

This article does not contain any studies with human participants or animals performed by any of the authors.

Rights and permissions

Reprints and Permissions

About this article

Verify currency and authenticity via CrossMark

Cite this article

Cheng, C.C.J. Sustainability Orientation, Green Supplier Involvement, and Green Innovation Performance: Evidence from Diversifying Green Entrants. J Bus Ethics 161, 393–414 (2020). https://doi.org/10.1007/s10551-018-3946-7

Download citation

  • Received:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s10551-018-3946-7

Keywords

  • Sustainability orientation
  • Green supplier involvement
  • Green innovation