Abstract

The role of businesses in sustainable development gained increasingly more importance, together with the increasing speed of technological advancements, in addition to the economic effects of climate change, pandemics, disasters, and wars. The capabilities of businesses allowing them to adapt to environmental conditions to use their resources and turn them into productive outputs efficiently are considered critical factors in achieving sustainable competitive advantage. Therefore, the present study aimed to determine the effects of businesses’ marketing, process, organisational, and product innovation capabilities on corporate sustainability. The data used in the present study, which has an explanatory research design, were collected from managers of 452 SMEs in an emerging economy (Turkey) using the non-random quota sampling method. During the data collection, a survey was carried out on the manufacturing firms operating in Kocaeli, Sakarya, Düzce, Yalova, and Bolu provinces in a region called TR42 in the Eastern Marmara region, which is an important industrial region in Turkey. During the data analysis, SPSS was used to obtain the descriptive statistics, and AMOS to obtain the inferential statistics. Within this context, covariance-based Structural Equation Modelling (SEM) was utilised to test organisational sustainability’s causal relationships with variables constituting the innovation capabilities. The results achieved here suggest that marketing, process, corporate, and product innovation capabilities have an effect that increases organisational sustainability. Furthermore, the results indicate that marketing innovation capability had a higher impact on organisational sustainability than other capacities constituting the innovation capability. The present study offers important interpretations and conclusions for businesses which operate in an emerging economy at the level of SME to improve their sustainability objectives in terms of resource, capability, and environmental adaptation.

Keywords: sustainability, organizational sustainability, innovation capabilities, emerging economy.

JEL Classification: M11, M31, O31, Q56.

Cite as: Esen, S., Saygili, M., & Ates, C. (2023). Effects of Innovation Capabilities on Organisational Sustainability: Evidence from an Emerging Economy. Marketing and Management of Innovations, 14(2), 58-74. https://doi.org/10.21272/mmi.2023.2-07

This work is licensed under a Creative Commons Attribution 4.0 International License

References

1. Adam, N. A., & Alofaysan, H. (2023). External knowledge flows and small and medium-sized enterprises’ innovation capabilities enhancement: An empirical investigation. Sustainability, 15(5), 4071. [Google Scholar] [CrossRef]
2. Al Othman, F., & Sohaib, O. (2016). Enhancing innovative capability and sustainability of Saudi firms. Sustainability, 8(12), 1229. [Google Scholar] [CrossRef]
3. Ali, H., Hao, Y., & Aijuan, C. (2020). Innovation capabilities and small and medium enterprises’ performance: An exploratory study. The Journal of Asian Finance, Economics and Business, 7(10), 959 -968. [Google Scholar] [CrossRef]
4. Alsehani, F. N., Wahab, A. W. B. A., & Shuib, L. (2023). Exploring social media and organisational sustainability performance goals: Themes, functional areas, and practices learning from the preceding decade. Sustainability, 15, 2115. [Google Scholar] [CrossRef]
5. Althnayan, S., Alarifi, A., Bajaba, S., & Alsabban, A. (2022). Linking environmental transformational leadership, environmental organizational citizenship behavior, and organizational sustainability performance: A moderated mediation model. Sustainability, 14(14), 8779. [Google Scholar] [CrossRef]
6. Anderson, J. C., & Gerbing, D. W. (1988). Structural equation modeling in practice: A review and recommended two-step approach. Psychological bulletin, 103(3), 411. [Google Scholar]
7. Bagozzi, R. P., Yi, Y., & Phillips, L. W. (1991). Assessing construct validity in organisational research. Administrative Science Quarterly, 36(3), 421- 458. [Google Scholar] [CrossRef
8. Barlett, J. E., Körtlik, J. W., & Higgins, C. C. (2001). Organisational research: Determining the appropriate sample size in survey research. Information Technology, Learning, and Performance Journal, 19(1), 43-50. [Google Scholar]
9. Barney, J. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17(1), 99–120. [Google Scholar]
10. Batista, A. A. d. S., & Francisco, A. C. d. (2018). Organisational sustainability practices: A study of the firms listed by the corporate sustainability index. Sustainability, 10, 226. [Google Scholar] [CrossRef]
11. Behnam, S., Cagliano, R., & Grijalvo, M. (2018). How should firms reconcile their open innovation capabilities for incorporating external actors in innovations aimed at sustainable development? Journal of Cleaner Production, 170, 950–965. [Google Scholar] [CrossRef]
12. Berthon, P., Ewing, M., & Hah, L. L. (2005). Captivating company: Dimensions of attractiveness in employer branding. International Journal of Advertising, 24(2), 151–172. [Google Scholar] [CrossRef]
13. Bianchi, G., Testa, F., Boiral, O, & Iraldo, F. (2022). Organisational learning for environmental sustainability: Internalising lifecycle management. Organization & Environment, 35(1), 103–129. 4
14. Bittencourt, B. A., Galuk, M. B., Daniel, V. M., & Zen, A. C. (2019). Cluster innovation capability: A systematic review. International Journal of Innovation, 7(1), 26–44. [Google Scholar] [CrossRef]
15. Braccini, A. M., & Margherita, E. G. (2018). Exploring organisational sustainability of Industry 4.0 under the Triple Bottom Line: The case of a manufacturing company. Sustainability, 11, 36. [Google Scholar] [CrossRef]
16. Crossan, M. M., & Apaydin, M. (2010). A multi-dimensional framework of organisational innovation: A systematic review of the literature. Journal of Management. Studies, 47(6), 1154-1191. [Google Scholar] [CrossRef]
17. Damanpour, F. (1991). Organisational innovation: A meta-analysis of effects of determinants and moderators. Academy of Management Journal, 34(3), 555–590. [Google Scholar] [CrossRef]
18. Dangelico, R. M., & Pujari, D. (2010). Mainstreaming green product innovation: Why and how companies integrate environmental sustainability. Journal of Business Ethics, 95, 471-486. [Google Scholar] [CrossRef]
19. Darmani, A., Niesten, E. M., & Hekkert, M. P. (2017). Characteristics of investors in onshore wind power in Sweden. Environmental innovation and societal transitions, 24, 67-82. [Google Scholar] [CrossRef]
20. Davis, D. F., Golicic, S. L., & Marquardt, A. (2009). Measuring brand equity for logistics services. The International Journal of Logistics Management, 20(2), 201–212. [Google Scholar] [CrossRef]
21. De Medeiros, J. F., Ribeiro, J. L. D., & Cortimiglia, M. N. (2014). Success factors for environmentally sustainable product innovation: A systematic literature review. Journal of Cleaner Production. 65, 76–86. [Google Scholar] [CrossRef]
22. Edeh, F. O., Zayed, N. M., Nitsenko, V., Brezhnieva-Yermolenko, O., Negovska, J., & Shtan, M. (2022). Predicting innovation capability through knowledge management in the banking sector. Journal of Risk and Financial Management,15, 312. [Google Scholar] [CrossRef]
23. Edward, M., George, B. P., & Sarkar, S. K. (2010). The impact of switching costs upon the service quality–perceived value–customer satisfaction–service loyalty chain: A study in the context of cellular services in India. Services Marketing Quarterly, 31, 151–173. [Google Scholar] [CrossRef]
24. Eggert, A., Thiesbrummel, C., & Deutscher, C. (2014). Differential effects of product and service innovations on the financial performance of industrial firms. Journal of Business Market Management, 7(3), 380–405. [Google Scholar]
25. Eisenhardt, K. M., & Martin, J. A. (2000). Dynamic capabilities: What are they? Strategic Management Jorurnal, 21, 1105–1121. [Google Scholar] [CrossRef]
26. Florea, L., Cheung, Y. H., & Herndon, N. C. (2013). For all good reasons: Role of values in organisational sustainability. Journal of Business Ethics, 114, 393–408. [Google Scholar] [CrossRef]
27. Fornell, C., & Larcker, D. F. (1981). Evaluating Structural equation models with unobservable variables and measurement error. Journal of Marketing Research, 18(1), 39-50. [Google Scholar] [CrossRef]
28. Frishammar, J., Kurkkio, M., Abrahamsson, L., & Lichtenthaler, U. (2012). Antecedents and consequences of firms’ process innovation capability: A literature review and a conceptual framework. IEEE Transactions on Engineering Management, 59(4), 519–529. [Google Scholar] [CrossRef]
29. Gomes, J. F. S., Sabino, A., & Antunes, V. (2023). The effect of green human resources management practices on employees’ affective commitment and work engagement: The moderating role of employees’ biospheric value. Sustainability, 15, 2190. [Google Scholar] [CrossRef]
30. Gomez-Trujillo, A. M., & Gonzalez-Perez, M. A. (2020). What do we know about organisational sustainability and international business? Management of Environmental Quality, 31(2), 292–305. [Google Scholar] [CrossRef]
31. Goni, J. I. C., & Van Looy, A. (2022). Process innovation capability in less-structured business processes: A systematic literature review. Business Process Management Journal, 28(3), 557–584. [Google Scholar] [CrossRef]
32. Guan, J., & Ma, N. (2003). Innovative Capability and Export Performance of Chinese Firms. Technovation. 23(9), 737–747. [Google Scholar] [CrossRef]
33. Gunday, G., Ulusoy, G., Kilic, K., & Alpkan, L. (2011). Effects of innovation types on firm performance. International Journal of Production Economics, 133(2), 662–676. [Google Scholar] [CrossRef]
34. Gürbüz, S., & Şahin, F. (2016). Sosyal Bilimlerde Araştırma Yöntemleri. Ankara, Seçkin Yayıncılık. [Google Scholar]
35. Hair, J., Black, W. C., Babin, B. J., & Anderson, R. E. (2010). Multivariate Data Analysis. New Jersey. Pearson Prentice Hall. [Google Scholar]
36. Hami, N., Muhamad, M. R., & Ebrahim, Z. (2015). The impact of sustainable manufacturing practices and innovation performance on economic sustainability. Procedia CIRP, 26, 190–195. [Google Scholar] [CrossRef]
37. Hanaysha, J. R. (2020). Innovation capabilities and authentic leadership: Do they really matter to firm performance? Journal of Asia-Pacific Business, 21, 271–290. [Google Scholar] [CrossRef]
38. Hanaysha, J. R., Al-Shaikh, M. E., Joghee, S., & Alzoubi, H. M. (2022). Impact of innovation capabilities on business sustainability in small and medium enterprises. FIIB Business Review, 11(1), 67-78. [Google Scholar] [CrossRef]
39. Hanaysha, J., & Hilman, H. (2015). Strategic effects of product innovation, service quality, and relationship quality on brand equity. Asian Social Science, 11(10), 56-72. [Google Scholar] [CrossRef]
40. Helfat, C. E., & Peteraf, M. A. (2009). Understanding dynamic capabilities: progress along a developmental path. Strategic Organization, 7(1), 91–102. [Google Scholar] [CrossRef]
41. Inków, M. (2020). Organisational innovation capability as a result of knowledge management processes – a literature review. Management, 24(1), 143–156. [Google Scholar] [CrossRef]
42. Irfan, M., Razzaq, A., Sharif, A., & Yang, X. (2022). Influence mechanism between green finance and green innovation: Exploring regional policy intervention effects in China. Technological Forecasting and Social Change,182, 121882. [Google Scholar] [CrossRef]
43. Israel, G. D. (1992). Determining Sample Size.University of Florida: Gainesville, FL, USA, 1–5. [Google Scholar]
44. Kafetzopoulos, D., & Psomas, E. (2015). The impact of innovation capability on the performance of manufacturing companies: the Greek case. Journal of Manufacturing Technology Management, 26(1), 104-130. [Google Scholar] [CrossRef]
45. Kara, E., Akbaba, M., Yakut, E., Çetinel, M. H., & Pasli, M. M. (2023). The mediating effect of green human resources management on the relationship between organisational sustainability and innovative behaviour: An Application in Turkey. Sustainability, 15, 2068. [Google Scholar] [CrossRef]
46. Khan, B. A., & Naeem, H. (2018). The impact of strategic quality orientation on innovation capabilities and sustainable business growth: Empirical evidence from the service sector of Pakistan. International Journal of Quality & Reliability Management, 35(8), 1568–1598. [Google Scholar] [CrossRef]
47. Kline, R. B. (1998). Principles and Practice of Structural Equation Modeling; The Gilford Press: New Jersey. [Google Scholar]
48. Lawson, B., & Samson, D. (2001). Developing innovation capability in organisations: A dynamic capabilities approach. International Journal of Innovation Management, 5(3), 377–400. [Google Scholar] [CrossRef]
49. Ledesma-Chaves, P., & Arenas-Gaitán, J. (2022). Dynamic innovation capabilities and their impact on export performance in times of economic crisis. Revista Brasileira de Gestão de Negócios, 24(02), 351–365. [Google Scholar] [CrossRef]
50. Lieberherr, E., & Truffer, B. (2015). The impact of privatisation on sustainability transitions: A comparative analysis of dynamic capabilities in three water utilities. Environmental Innovation and Societal Transitions, 15, 101–122. [Google Scholar] [CrossRef]
51. Maldonado-Guzmán, G., Garza-Reyes, J. A., Pinzón-Castro, S. Y., & Kumar, V. (2019). Innovation capabilities and performance: Are they truly Linked in SMEs? International Journal of Innovation Science, 11, 48–62. [Google Scholar] [CrossRef]
52. Mariadoss, B. J., Tansuhaj, P. S., & Mouri, N. (2011). Marketing capabilities and innovation-based strategies for environmental sustainability: An exploratory investigation of B2B firms. Industrial Marketing Management. 40(8), 1305–1318. [Google Scholar] [CrossRef]
53. Mishra, P., & Datta, B. (2011). Perpetual asset management of customer-based brand equity by the PAM evaluator. Current Research Journal of Social Sciences, 3(1), 34-43. [Google Scholar]
54. Moreira, A., Navaia, E., & Ribau, C. (2022). Moderation effects of government institutional support and active and reactive internationalisation behaviour on innovation capability and export performance. Economies,10(8), 177. [Google Scholar] [CrossRef]
55. Nair, A. K. S., & Bhattacharyya, S. S. (2022). Sustainability competencies and their link to innovation capabilities. European Business Review, 34, 819–836. [Google Scholar] [CrossRef]
56. Nawaz, W., & Koç, M. (2019). Exploring organisational sustainability: Themes, functional areas, and best practices. Sustainability, 11(16), 4307. [Google Scholar] [CrossRef]
57. Nikolaou, I., Evangelinos, K., & Leal Filho, W. (2015). A dynamic system approach for exploring the effects of climate change risks on firms’ economic performance. Journal of Cleaner Production, 103, 499–506. [Google Scholar] [CrossRef]
58. Ostermann, C. M., Nascimento, L. D. S., Lopes, C. M. C. F., Camboim, G. F., & Zawislak, P. A. (2022). Innovation capabilities for sustainability: A comparison between green and grey companies. European Journal of Innovation Management, 25(4), 1200–1219. [Google Scholar] [CrossRef]
59. Pant, M., Virdi, A. S., & Chaubey, D. S. (2020). Examining the effect of marketing innovations on GPMA: A study using the PLS–SEM Approach. Global Business Review, 21(4), 1025-1036. [Google Scholar] [CrossRef]
60. Parthasarathy, R., Garfield, M., Rangarajan, A., & Kern, J. L. (2021). The case of organisational innovation capability and health information technology implementation success: As you sow, so you reap? International Journal of Healthcare Information Systems and Informatics, 16(4), 1–27. [Google Scholar] [CrossRef]
61. Penrose, E. T. (1959). The Theory of the Growth of the Firm. New York, Jonh Wiley. [Google Scholar]
62. Rauter, R., Globocnik, D., Perl-Vorbach, E., & Baumgartner, R. J. (2019). Open innovation and its effects on economic and sustainability innovation performance. Journal of Innovation & Knowledge, 4(4), 226–233. [Google Scholar] [CrossRef]
63. Rönkkö, M., & Cho, E. (2022). An updated guideline for assessing discriminant validity. Organisational Research Methods, 25(1), 6–14. [Google Scholar] [CrossRef]
64. Salmanzadeh-Meydani, N., Ghomi, S. M. T. F., Haghighi, S. S., & Govindan, K. (2023). A multivariate quantitative approach for sustainability performance assessment: An upstream oil and gas company. Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development. 25(3), 2777–2807. [Google Scholar] [CrossRef]
65. Saunila, M., & Ukko, J. (2012). A conceptual framework for the measurement of innovation capability and its effects. Baltic Journal of Management,7(4), 355–375. [Google Scholar] [CrossRef]
66. Schermelleh-Engel, K., Moosbrugger, H., & Müller, H. (2003). Evaluating the fit of structural equation models: Tests of significance and descriptive goodness-of-fit measures. Methods of Psychological Research, 8(2), 23–74. [Google Scholar]
67. Schulte, J., & Hallstedt, S. I. (2018). Self-assessment method for sustainability implementation in product innovation. Sustainability, 10(12), 4336. [Google Scholar] [CrossRef]
68. Sipos, G. L. (2008). Innovation—Source to obtain a competitive advantage in the global economy. Annals of Faculty of Economics, 2, 767–771. [Google Scholar]
69. Teece, D. J. (2009). Dynamic Capabilities and Strategic Management: Organising for Innovation and Growth. London Oxford University Press. [Google Scholar]
70. Teece, D. J., Pisano, G., & Shuen, A. (1997). Dynamic capabilities and strategic management. Strategic Management Journal, 18(7), 509–533. [Google Scholar]
71. Theißen, S., Spinler, S., & Huchzermeier, A. (2014). Reducing the carbon footprint within fast-moving consumer goods supply chains through collaboration: The manufacturers’ perspective. Journal of Supply Chain Management. 50(4), 44–61. [Google Scholar] [CrossRef]
72. Ullah, Z., Álvarez-Otero, S., Sulaiman, M. A. B. A., Sial, M. S., Ahmad, N., Scholz, M., & Omhand, K. (2021). Achieving organisational social sustainability through electronic performance appraisal systems: The moderating influence of transformational leadership. Sustainability, 13(10), 5611. [Google Scholar] [CrossRef]
73. Utterback, J. M., & Abernathy, W. J. (1975). A dynamic model of process and product innovation. Omega, 3(6), 639–656. [Google Scholar] [CrossRef]
74. WEF. (2022). The Global Risks Report 2022 17th Edition; Cologny/Geneva. Retrieved from [Link]
75. Wernerfelt, B. (1984). A Resource-based view of the firm. Strategic Management Journal, 5(2), 171–180. [Google Scholar] [CrossRef]
76. WWF. (2022). Effects of Climate Change. Retrieved from [Link]
77. Xie, X., & Wang, H. (2020). How can open innovation ecosystem modes push product innovation forward? An FsQCA analysis. Journal of Business Research. 108, 29–41. [Google Scholar] [CrossRef]
78. Yeşil, S., & Doğan, I. F. (2019). Exploring the relationship between social capital, innovation capability and innovation. Innovation, 21(4), 506-532. [Google Scholar] [CrossRef]
79. Yousif, A. H., Najm, N. A., & Nasour, J. A. (2017). Sustainability and its role in organisational performance in the Jordanian pharmaceutical industry. International Journal of Economics and Business Research. 8(5), 41-56. [Google Scholar]
80. Zait, A., & Bertea, P. E. (2011). Methods for testing discriminant validity. Management&Marketing, 9(2), 217-224. [Google Scholar]
81. Zimmermann, R., Ferreira, L. M. D. F., & Moreira, A. C. (2020). How supply chain strategies moderate the relationship between innovation capabilities and business performance. Journal of Purchasing and Supply Management, 26(5), 100658. [Google Scholar] [CrossRef]
82. Zott, C. (2003). Dynamic capabilities and the emergence of intraindustry differential firm performance: insights from a simulation study. Strategic management journal, 24(2), 97-125. [Google Scholar] [CrossRef]
83. Zulkiffli, S. N. A., Zaidi, N. F. Z., Padlee, S. F., & Sukri, N. K. A. (2022). Eco-innovation capabilities and sustainable business performance during the COVID-19 pandemic. Sustainability, 14(13), 7525. [Google Scholar] [CrossRef]