The role of organizational controls to ...

Although improving a company’s sustainability innovation performance (SIP) has become increasingly important, managers still struggle to achieve such performance at the portfolio level. In our research, we demonstrate that managers can support SIP with formal controls in the form of clear sustainability-related innovation goals, program activities, and a mission statement that provides the guidance and alignment necessary for sustainable innovation. The effect is strengthened when complemented by social controls that coordinate behavior and decisions through shared sustainability-related norms and values. However, social controls have no independent effect on SIP. These findings result from approaching the challenge of firms in embedding sustainability into their innovation activities through the lens of organizational control theory. Organizational controls are implemented to orchestrate complex innovation tasks that go beyond those attained by using isolated managerial practices. Empirically, we used multi-respondent field survey data from 114 firms and applied hierarchical ordinary least-squares regression analysis. The study has limitations and thereby provides opportunities for future research as it relies on cross sectional data that does not capture dynamics over time, and the response rate caused by the multi-respondent design with executives and senior managers.