[EN] In the financial industry, two relationships are well-researched: (i) innovation and financial performance and, (ii) sustainability and financial performance, both focused primarily on Western and advanced countries. The relationship between innovation and sustainability, however, is underresearched. This study's purpose consists of determining whether there is a relationship between innovation and corporate sustainability in the financial industry. In doing so, this study responds to a critical question: are the most innovative firms also the most sustainability-oriented? We empirically explore sustainability-oriented innovation in the financial industry of 11 catching-up countries in Central and Eastern Europe (CEE). Using Community Innovation Survey (CIS) data for 2012-2014, this study empirically analyzes a large sample of 1574 firms in the financial industry. Our results suggest that innovation is positively linked to corporate sustainability, pointing out that innovation capabilities are positively related to sustainability. Our study proposes a framework for analyzing innovation and sustainability from a capability-perspective. This research was funded by MINISTRY OF SCIENCE, INNOVATION AND UNIVERSITY, grant number RTI2018-095739-B-100. We acknowledge EUROSTAT data support. Francisca Sempere-Ripoll thanks. Davide Parrilli from the Faculty of Management at Bournemouth University and "Salvador Madariaga Program" funded by the Spanish Ministry Science, Innovation and Universities (ref: PRX19/00538). Sempere-Ripoll, F.; Estelles Miguel, S.; Rojas-Alvarado, R.; Hervás Oliver, JL. (2020). Does Technological Innovation Drive Corporate Sustainability? Empirical Evidence for the European Financial Industry in Catching-Up and Central and Eastern Europe. Sustainability. 12(6):1-19. https://doi.org/10.3390/su12062261 Forcadell, F. J., & Aracil, E. (2019). Can multinational companies foster institutional change and sustainable development in emerging countries? A case study. BUSINESS STRATEGY & DEVELOPMENT, 2(2), 91-105. doi:10.1002/bsd2.45 Amore, M. D., Schneider, C., & Žaldokas, A. (2013). Credit supply and corporate innovation. Journal of Financial Economics, 109(3), 835-855. doi:10.1016/j.jfineco.2013.04.006 Hsu, P.-H., Tian, X., & Xu, Y. (2014). Financial development and innovation: Cross-country evidence. Journal of Financial Economics, 112(1), 116-135. doi:10.1016/j.jfineco.2013.12.002 Laukkanen, T. (2016). Consumer adoption versus rejection decisions in seemingly similar service innovations: The case of the Internet and mobile banking. Journal of Business Research, 69(7), 2432-2439. doi:10.1016/j.jbusres.2016.01.013 Epstein, M. J., & Roy, M.-J. (2003). Improving Sustainability Performance: Specifying, Implementing and Measuring Key Principles. Journal of General Management, 29(1), 15-31. doi:10.1177/030630700302900101 Simpson, W. G., & Kohers, T. (2002). Journal of Business Ethics, 35(2), 97-109. doi:10.1023/a:1013082525900 Wu, M.-W., & Shen, C.-H. (2013). Corporate social responsibility in the banking industry: Motives and financial performance. Journal of Banking & Finance, 37(9), 3529-3547. doi:10.1016/j.jbankfin.2013.04.023 Esteban-Sanchez, P., de la Cuesta-Gonzalez, M., & Paredes-Gazquez, J. D. (2017). Corporate social performance and its relation with corporate financial performance: International evidence in the banking industry. Journal of Cleaner Production, 162, 1102-1110. doi:10.1016/j.jclepro.2017.06.127 Adams, R., Jeanrenaud, S., Bessant, J., Denyer, D., & Overy, P. (2015). Sustainability-oriented Innovation: A Systematic Review. International Journal of Management Reviews, 18(2), 180-205. doi:10.1111/ijmr.12068 Yip, A. W. H., & Bocken, N. M. P. (2018). Sustainable business model archetypes for the banking industry. Journal of Cleaner Production, 174, 150-169. doi:10.1016/j.jclepro.2017.10.190 Fijałkowska, J., Zyznarska-Dworczak, B., & Garsztka, P. (2018). Corporate Social-Environmental Performance versus Financial Performance of Banks in Central and Eastern European Countries. Sustainability, 10(3), 772. doi:10.3390/su10030772 Furrer, O., Egri, C. P., Ralston, D. A., Danis, W. M., Reynaud, E., Naoumova, I., … Furrer-Perrinjaquet, A. (2010). Attitudes toward Corporate Responsibilities in Western Europe and in Central and East Europe. Management International Review, 50(3), 379-398. doi:10.1007/s11575-010-0034-3 Castellacci, F., & Archibugi, D. (2008). The technology clubs: The distribution of knowledge across nations. Research Policy, 37(10), 1659-1673. doi:10.1016/j.respol.2008.08.006 Cai, W., & Zhou, X. (2014). On the drivers of eco-innovation: empirical evidence from China. Journal of Cleaner Production, 79, 239-248. doi:10.1016/j.jclepro.2014.05.035 Cainelli, G., De Marchi, V., & Grandinetti, R. (2015). Does the development of environmental innovation require different resources? Evidence from Spanish manufacturing firms. Journal of Cleaner Production, 94, 211-220. doi:10.1016/j.jclepro.2015.02.008 Awaysheh, A., Heron, R. A., Perry, T., & Wilson, J. I. (2020). On the relation between corporate social responsibility and financial performance. Strategic Management Journal, 41(6), 965-987. doi:10.1002/smj.3122 Barney, J. B. (1996). The Resource-Based Theory of the Firm. Organization Science, 7(5), 469-469. doi:10.1287/orsc.7.5.469 Teece, D. J., Pisano, G., & Shuen, A. (1997). Dynamic capabilities and strategic management. Strategic Management Journal, 18(7), 509-533. doi:10.1002/(sici)1097-0266(199708)18:73.0.co;2-z Park, E., Kim, K. J., & Kwon, S. J. (2017). Corporate social responsibility as a determinant of consumer loyalty: An examination of ethical standard, satisfaction, and trust. Journal of Business Research, 76, 8-13. doi:10.1016/j.jbusres.2017.02.017 Bansal, P., & Song, H.-C. (2017). Similar But Not the Same: Differentiating Corporate Sustainability from Corporate Responsibility. Academy of Management Annals, 11(1), 105-149. doi:10.5465/annals.2015.0095 Bocken, N. M. P., Short, S. W., Rana, P., & Evans, S. (2014). A literature and practice review to develop sustainable business model archetypes. Journal of Cleaner Production, 65, 42-56. doi:10.1016/j.jclepro.2013.11.039 Orlitzky, M., Schmidt, F. L., & Rynes, S. L. (2003). Corporate Social and Financial Performance: A Meta-Analysis. Organization Studies, 24(3), 403-441. doi:10.1177/0170840603024003910 Surroca, J. A., Aguilera, R. V., Desender, K., & Tribó, J. A. (2020). Is managerial entrenchment always bad and corporate social responsibility always good? A cross‐national examination of their combined influence on shareholder value. Strategic Management Journal, 41(5), 891-920. doi:10.1002/smj.3132 Luo, X., & Du, S. (2014). Exploring the relationship between corporate social responsibility and firm innovation. Marketing Letters, 26(4), 703-714. doi:10.1007/s11002-014-9302-5 Horbach, J. (2008). Determinants of environmental innovation—New evidence from German panel data sources. Research Policy, 37(1), 163-173. doi:10.1016/j.respol.2007.08.006 Lu, B., Li, B., Wang, L., Yang, J., Liu, J., & Wang, X. V. (2014). Reusability based on Life Cycle Sustainability Assessment: Case Study on WEEE. Procedia CIRP, 15, 473-478. doi:10.1016/j.procir.2014.06.046 Urban, M., & Wójcik, D. (2019). Dirty Banking: Probing the Gap in Sustainable Finance. Sustainability, 11(6), 1745. doi:10.3390/su11061745 Chih, H.-L., Chih, H.-H., & Chen, T.-Y. (2009). On the Determinants of Corporate Social Responsibility: International Evidence on the Financial Industry. Journal of Business Ethics, 93(1), 115-135. doi:10.1007/s10551-009-0186-x Wang, J., Wang, Y., Li, S., & Qin, D. (2016). Climate adaptation, institutional change, and sustainable livelihoods of herder communities in northern Tibet. Ecology and Society, 21(1). doi:10.5751/es-08170-210105 Hurley, J. A., Green, T. A., Gouge, D. H., Bruns, Z. T., Stock, T., Braband, L., … Crane, L. (2014). Regulating Pesticide Use in United States Schools. American Entomologist, 60(2), 105-115. doi:10.1093/ae/60.2.105 De Marchi, V. (2012). Environmental innovation and R&D cooperation: Empirical evidence from Spanish manufacturing firms. Research Policy, 41(3), 614-623. doi:10.1016/j.respol.2011.10.002 Orsatti, G., Quatraro, F., & Pezzoni, M. (2020). The antecedents of green technologies: The role of team-level recombinant capabilities. Research Policy, 49(3), 103919. doi:10.1016/j.respol.2019.103919 Bossink, B. A. . (2007). Leadership for sustainable innovation. International Journal of Technology Management & Sustainable Development, 6(2), 135-149. doi:10.1386/ijtm.6.2.135_1 Zhao, Q., Tsai, P.-H., & Wang, J.-L. (2019). Improving Financial Service Innovation Strategies for Enhancing China’s Banking Industry Competitive Advantage during the Fintech Revolution: A Hybrid MCDM Model. Sustainability, 11(5), 1419. doi:10.3390/su11051419 Apanasovich, N., Alcalde Heras, H., & Parrilli, M. D. (2016). The impact of business innovation modes on SME innovation performance in post-Soviet transition economies: The case of Belarus. Technovation, 57-58, 30-40. doi:10.1016/j.technovation.2016.05.001 Szczygielski, K., Grabowski, W., Pamukcu, M. T., & Tandogan, V. S. (2017). Does government support for private innovation matter? Firm-level evidence from two catching-up countries. Research Policy, 46(1), 219-237. doi:10.1016/j.respol.2016.10.009 Laursen, K., & Salter, A. (2005). Open for innovation: the role of openness in explaining innovation performance among U.K. manufacturing firms. Strategic Management Journal, 27(2), 131-150. doi:10.1002/smj.507 Evangelista, R., & Vezzani, A. (2010). The economic impact of technological and organizational innovations. A firm-level analysis. Research Policy, 39(10), 1253-1263. doi:10.1016/j.respol.2010.08.004 Escribano, A., Fosfuri, A., & Tribó, J. A. (2009). Managing external knowledge flows: The moderating role of absorptive capacity. Research Policy, 38(1), 96-105. doi:10.1016/j.respol.2008.10.022 Heidenreich, E. (2008). Spaces of flow as technical and cultural mediators between society and nature. Environment, Development and Sustainability, 11(6), 1145-1154. doi:10.1007/s10668-008-9171-2 Rammer, C., Czarnitzki, D., & Spielkamp, A. (2009). Innovation success of non-R&D-performers: substituting technology by management in SMEs. Small Business Economics, 33(1), 35-58. doi:10.1007/s11187-009-9185-7 Grillitsch, M., & Hansen, T. (2019). Green industry development in different types of regions. European Planning Studies, 27(11), 2163-2183. doi:10.1080/09654313.2019.1648385 Heyman, F., Norbäck, P.-J., Persson, L., & Andersson, F. (2019). Has the Swedish business sector become more entrepreneurial than the US business sector? Research Policy, 48(7), 1809-1822. doi:10.1016/j.respol.2019.04.007 Isaksen, A., & Trippl, M. (2017). Innovation in space: the mosaic of regional innovation patterns. Oxford Review of Economic Policy, 33(1), 122-140. doi:10.1093/oxrep/grw035 Dyduch, J., & Krasodomska, J. (2017). Determinants of Corporate Social Responsibility Disclosure: An Empirical Study of Polish Listed Companies. Sustainability, 9(11), 1934. doi:10.3390/su9111934 Campbell, J. L. (2007). Why would corporations behave in socially responsible ways? an institutional theory of corporate social responsibility. Academy of Management Review, 32(3), 946-967. doi:10.5465/amr.2007.25275684 Cassiman, B., & Veugelers, R. (2006). In Search of Complementarity in Innovation Strategy: Internal R&D and External Knowledge Acquisition. Management Science, 52(1), 68-82. doi:10.1287/mnsc.1050.0470 Cohen, W. M., & Levinthal, D. A. (1990). Absorptive Capacity: A New Perspective on Learning and Innovation. Administrative Science Quarterly, 35(1), 128. doi:10.2307/2393553 Volberda, H. W., Foss, N. J., & Lyles, M. A. (2010). PERSPECTIVE—Absorbing the Concept of Absorptive Capacity: How to Realize Its Potential in the Organization Field. Organization Science, 21(4), 931-951. doi:10.1287/orsc.1090.0503 Hervas-Oliver, J.-L., Sempere-Ripoll, F., Rojas Alvarado, R., & Estelles-Miguel, S. (2017). Beyond product innovation: deciphering process-oriented innovators, complementarities and performance effects. Technology Analysis & Strategic Management, 30(5), 582-595. doi:10.1080/09537325.2017.1347623 Rivkin, J. W. (2000). Imitation of Complex Strategies. Management Science, 46(6), 824-844. doi:10.1287/mnsc.46.6.824.11940 Hervas-Oliver, J.-L., Albors Garrigos, J., & Gil-Pechuan, I. (2011). Making sense of innovation by R&D and non-R&D innovators in low technology contexts: A forgotten lesson for policymakers. Technovation, 31(9), 427-446. doi:10.1016/j.technovation.2011.06.006 Clausen, T. H., Korneliussen, T., & Madsen, E. L. (2013). Modes of innovation, resources and their influence on product innovation: Empirical evidence from R&D active firms in Norway. Technovation, 33(6-7), 225-233. doi:10.1016/j.technovation.2013.02.002 Marzucchi, A., & Montresor, S. (2017). Forms of knowledge and eco-innovation modes: Evidence from Spanish manufacturing firms. Ecological Economics, 131, 208-221. doi:10.1016/j.ecolecon.2016.08.032 Stieglitz, N., & Heine, K. (2006). Innovations and the role of complementarities in a strategic theory of the firm. Strategic Management Journal, 28(1), 1-15. doi:10.1002/smj.565 Del Río, P., Tarancón Morán, M. Á., & Albiñana, F. C. (2011). Analysing the determinants of environmental technology investments. A panel-data study of Spanish industrial sectors. Journal of Cleaner Production, 19(11), 1170-1179. doi:10.1016/j.jclepro.2010.05.001 Hervas-Oliver, J.-L., Sempere-Ripoll, F., & Boronat-Moll, C. (2014). Process innovation strategy in SMEs, organizational innovation and performance: a misleading debate? Small Business Economics, 43(4), 873-886. doi:10.1007/s11187-014-9567-3 Leiponen, A., & Helfat, C. E. (2009). Innovation objectives, knowledge sources, and the benefits of breadth. Strategic Management Journal, 31(2), 224-236. doi:10.1002/smj.807 Bencivenga, V. R., & Smith, B. D. (1991). Financial Intermediation and Endogenous Growth. The Review of Economic Studies, 58(2), 195. doi:10.2307/2297964 Damanpour, F. (2014). Footnotes to Research on Management Innovation. Organization Studies, 35(9), 1265-1285. doi:10.1177/0170840614539312 Milgrom, P., & Roberts, J. (1995). Complementarities and fit strategy, structure, and organizational change in manufacturing. Journal of Accounting and Economics, 19(2-3), 179-208. doi:10.1016/0165-4101(94)00382-f Scholtens, B. (2008). Corporate Social Responsibility in the International Banking Industry. Journal of Business Ethics, 86(2), 159-175. doi:10.1007/s10551-008-9841-x Hervas-Oliver, J.-L., Sempere-Ripoll, F., Estelles-Miguel, S., & Rojas-Alvarado, R. (2019). Radical vs incremental innovation in Marshallian Industrial Districts in the Valencian Region: what prevails? European Planning Studies, 27(10), 1924-1939. doi:10.1080/09654313.2019.1638887

Does Technological Innovation Drive Corporate Sustainability? Empirical Evidence for the European Financial Industry in Catching-Up and Central and Eastern Europe

Abstract