The effect of sustainability-oriented innovation on corporate performance in the SME context

Abstract

Unlike the vast majority of prior research, which gives too much focus on the effect of sustainability-oriented innovation on financial performance of organization, this study deepens existing literature by empirically examining the effect of sustainability-oriented innovation practices on corporate environmental performance and corporate social performance simultaneously. The data was collected in 93 small and medium sized companies in Vietnamese market whereas most of existing study is conducted in developed countries in the West. Results from the regression analyses suggest that sustainability-oriented innovation has a significant and positive effect on environmental performance and social performance. These results support the school of thought that advocates the presence of sustainability-oriented innovation in organizations. Moreover, this study takes a further step compared to prior research by performing the univariate analysis variance. The result reveals that different levels of sustainability-oriented innovation practice would lead to different mean values of environmental performance. Likewise, companies that have a higher level of sustainability-oriented innovation would achieve higher level of social performance. Furthermore, practical implications are offered for managers when they design and implement sustainability-oriented innovation practices in organizations.