Social Innovation, Environmental Innovation, and Their Effect on Competitive Advantage and Firm Performance

Social Innovation, Environmental Innovation, and Their Effect on Competitive Advantage and Firm Performance

Javier Amores Salvadó (Universidad Complutense de Madrid, Spain), José Emilio Navas López (Universidad Complutense de Madrid, Spain) and Gregorio Martín de Castro (Universidad Complutense de Madrid, Spain)
DOI: 10.4018/978-1-61350-165-8.ch006
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Abstract

The proposal below provides a special emphasis on the relationship between businesses and natural environment. It is argued that the inclusion of environmental criteria to business activities promotes the creation of new core competencies, offering a creative and innovative perspective to the organization that can lead to the achievement of sustainable competitive advantages. More specifically, we analyze both the existence of a direct relationship between Environmental Innovation and Firm Performance and the existence of an indirect relationship between the two, which highlights the mediating role of the kind of competitive advantage generated. It also provides an innovative approach, as it explains the Environmental Innovation from the literature on Social Innovation, considering Environmental Innovation as an expression of Social Innovation through the incorporation of ethical arguments to products, processes and organizational modes of the company. The main contributions of this work can be summarized as follows: (1) It explains the nature of Environmental Innovation through the Social Innovation literature, which allows consideration of some key aspects of administrative and technological innovations that have not been taken into account the academic literature. (2) The different types of environmental innovations are analyzed as a necessary step to understand the strategic options in the environmental field. (3) Environmental Innovation is related to business performance. The practical implications of the relationship between environmental innovation and performance are of great importance, since it directly influence the type of environmental strategy chosen, allowing the company to choose from innovative strategies (based on pollution prevention) or more conservative strategies (emissions control).
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Social Innovation

Social Innovation is an emerging field that remains under-researched (Social Innovation Exchange and Young Foundation, 2010). Very few are the efforts to classify and organize the various contributions. In this sense, is very interesting the contribution carried out by Pol and Ville (2009), which discusses some of the definitions given to the concept of Social Innovation elaborating a four group classification (understanding the concept as linked to institutional change, to social purposes, to the public good or to the satisfaction of needs not covered by the market).

On this first contribution, and taking as reference the characterization of the different types of businesses proposed by Professor Yunus (Yunus et al., 2010), two basic directions can be identified in the existing definitions in Social Innovation literature as shown by the four quadrants of Figure 1.

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