Attributes of external stakeholder engagement and sustainability-oriented innovation: lessons from the Norwegian minerals industry

Businesses have shown increasing interest in introducing innovative solutions concerning their products, processes and practices that can enable them to achieve economic, environmental and social sustainability. In this... [ view full abstract ]

Businesses have shown increasing interest in introducing innovative solutions concerning their products, processes and practices that can enable them to achieve economic, environmental and social sustainability. In this regard, scholars have used single or multiple case study evidences to show the significant role of various external stakeholders in improving the knowledge base of companies pursuing sustainability-oriented innovation (SOI). While the focus in this line of research has been to explore how companies deal with primary and secondary stakeholders in order to innovate, we have yet to understand the characteristics and impacts of various mechanisms for engaging stakeholders in innovation processes. Indeed, the few extant empirical studies have not paid attention to the intricacies of various types of relationships with stakeholders, which in turn limits the understanding about realizing innovation in multi-stakeholder business environments. To address this gap, this paper distinguishes between transactional and relational interactions, and further combine this dichotomy with breadth (the variety of stakeholder groups a firm has relationship with) and depth (the intensity of relationships) dimensions to regress the effects of four variables related to engagement attributes on SOI performance. The regression results based on a sample of 101 mineral companies in Norway reveal that relational interactions, where the focal firm and stakeholders participate actively in knowledge exchange processes, are relatively more significant for introducing SOI. The findings also corroborate the results of earlier research on the positive effect of transactional relationships through which companies search and acquire stakeholders’ knowledge and perspectives by means of different channels of engagement. Furthermore, broadness of stakeholder relationships (increasing the variety of stakeholders engaged in innovation processes) in both transactional and relational mechanisms are positively related to SOI performance. On the other hand, while increasing the intensity of knowledge acquisition from external stakeholders could weakly augment the likelihood of SOI, intense relational interaction is not significant for this outcome. A possible explanation for this result is that engaging deeply in mutual interactions with several groups of stakeholders requires high levels of internal resources in terms of time and absorptive capacity, and failure in effectively managing these resources confines the ability to exploit from external knowledge. Hence, we suggest firm managers to include a diverse range of stakeholders in their pathway to SOI, though the level of engagement with different groups of stakeholders should be adjusted according to the internal resources and capacity. This paper contributes to the literature on stakeholder engagement and sustainability by providing nuanced empirical insight to the relationships between firms’ various types of linkages with external stakeholders and their SOI performance. Moreover, to the best of our knowledge, this is the first study that employ an original survey-based dataset to examine the effect of stakeholder engagement on the outcome from SOI practices.