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Organizacija, Volume 47
Research papers Number 1, February 2014
Matjaž Maletič1, Damjan Maletič1, Jens J. Dahlgaard2, Su Mi Dahlgaard-Park3, Boštjan Gomišček1*
1University of Maribor, Faculty of Organizational Sciences, Kidričeva cesta 55a, SI-4000 Kranj, Slovenia;
matjaz.maletic@fov.uni-mb.si, damjan.maletic@fov.uni-mb.si, bostjan.gomiscek@fov.uni-mb.si (corresponding author)
2Linköping University, Department of Management and Engineering, Sweden; jens.jorn.dahlgaard@liu.se
3Lund University, Department of Service Management, Sweden; Su_Mi.Dahlgaard-Park@ism.lu.se
Background and Purpose - The purpose of this paper is to empirically analyse the effects of sustainability-oriented
innovation practices on the overall organizational performance. Further, this paper also aims to advance understanding
of the measurement of corporate sustainability practices with the focus on innovation dimensions.
Design/Methodology/Approach - The study uses data obtained from a survey of 116 organizations encompassing
both the manufacturing and service industries in Slovenia. Descriptive statistics were used in order to determine the
level of sustainability-oriented innovation practices deployment. Exploratory factor analysis was applied to extract the
underlying factors and to provide a basis for assessing their reliability and validity. In addition, regression analysis was
used to quantify the effect of sustainability practices on the organizational performance.
Results - Data analysis result showed that sustainability-oriented innovation practices are significantly associated with
organizational performance. Therefore, empirical evidence from this research confirmed the premise that building inno-
vation competencies and integrating innovation activities in organization’s processes lead to performance benefits. This
contributes to the debate about the potential for organizations to be sustainable and competitive.
Conclusion - The presented research on corporate sustainability provides important theoretical and practical insights
on which the deployment of sustainability-oriented innovation practices are conducive to fostering a broader set of per-
formance benefits. As such, managers should increase organizations’ capacity for innovation which can be beneficial
in terms of performance implications and achieving sustainability goals.
Keywords: corporate sustainability, sustainability-oriented innovation, organizational performance, empirical study
The Relationship between Sustainability–
Oriented Innovation Practices and
Organizational Performance: Empirical
Evidence from Slovenian Organizations
1 Introduction
The role of business in society has been a concern both of
scholars and practitioners for a long time (Salzmann et al.,
2005). In this sense, Delai and Takahashi (2013) points out
that sustainable development actions and initiatives have
become vital aspects for any organization. A sustainable
organization is one that contributes to sustainable develop-
ment by delivering simultaneously economic, social, and
environmental benefits—the so-called triple bottom line
(Hart and Milstein, 2003). Many authors have approached
this issue by discussing the business case for corporate
sustainability, including, Dyllik and Hockerts (2002) and
Salzmann et al. (2005). In general, the business case empha-
DOI: 10.2478/orga-2014-0001
Received: 13th December 2013; revised: 16th January 2014; accepted: 27th January 2014
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Organizacija, Volume 47
Research papers Number 1, February 2014
sises that business processes directed at achieving sustain-
able development sense are necessary for the financial
growth of an organization. The business case for sustainabil-
ity is often used to provide motivations for an organization
to integrate aspects of sustainability into business processes
(Asif et al., 2011).
In addition, many studies have discussed the business
case for a sustainability innovation (e.g. Wagner, 2008). In
this regard, the challenge for business is to develop innova-
tion strategies in order to respond to needs and expectations
of a wide array of stakeholders (Ayuso et al., 2006) and
at the same time justify economic rationale behind these
sustainability activities (Schaltegger and Wagner, 2006).
Furthermore, van Kleef and Roome (2007) suggest that
developing competencies that foster innovation for sustain-
able development can be perceived as the basis of competi-
tiveness. For example, these competencies can enable orga-
nizations to offer products and services that create value for
customers and to generate new products and services, and
therefore adapting to rapidly changing environment faster
than competitors (van Kleef and Roome, 2007).
An improved understanding of the link between sus-
tainability-oriented innovation practices and organizational
performance does not just contribute to a debate about the
business case for sustainability (Schaltegger and Wagner,
2006), but also contribute to the knowledge of measuring
sustainability-oriented innovation activities (Pujari, 2006).
However, few studies have empirically investigated the
specific organizational performance outcomes concerning
sustainability-oriented innovation.
Thus, the following research question is addressed
in this study: Can an organization benefit by creating
and deploying sustainability-oriented innovation practices?
Therefore, this study adds to the emerging dialogue on
corporate sustainability by empirically investigating the
performance benefits of business activities that are directed
towards sustainability through innovation.
The paper is structured as follows: firstly, the literature
review that underpinned this research and the methodology
employed to carry it out are presented in sections 2 and 3,
respectively. Then, in section 4 empirical evidence on the
relation between sustainability-oriented innovation practices
and organizational performance is presented. In section 5,
we conclude with a discussion of the results, implications,
and issues for further research.
2 Literature review
2.1 Sustainability practices
Recognizing the multi-dimensional nature of sustainabil-
ity, a rapidly growing literature documents a wide range
of specific sustainability practices being implemented by
organizations (see, for example, Hahn and Scheermesser,
2006; Collins et al., 2010; Maletic et al., 2011; Fairfield et
al., 2011). One key starting point in the debate on sustain-
ability management is the inclusion of stakeholders and
the integration of their respective demands (Seuring and
Gold, 2013), which is suggested to be a critical process that
helps organizations to understand their key environmental
and social impacts (Rocha et al., 2007). As far as corporate
environmentalism is concerned, considerable attention has
been paid in the literature to the eco-efficiency (Côté et al.,
2006) in terms of reducing energy and material intensity,
utilizing renewable energy sources, and in the context of
emissions reduction of pollutants and waste minimization.
Furthermore, apart from talking the environmental prob-
lems, many other practices aim at creating more sustainable
workplaces by focusing on worker health and safety aspects,
employee engagement, equity as well as quality of life (e.g.
Hutchins and Sutherland, 2008). Employee centred sustain-
ability practices are also related to the sustainability oriented
organizational learning (Siebenhuner and Anold, 2007).
Recently, literature has paid attention to the sustainability-
related innovation practices, predominantly through the
search of the ways on how to manage product development
in a more sustainable way (Hallstedt et al., 2013).
Therefore, a number of fields, such as corporate envi-
ronmentalism, corporate social responsibility, stakeholder,
stakeholder theory and sustainable development, have con-
tributed to the expansion of corporate sustainability litera-
ture. Due to difficulties in defining the concept of corporate
sustainability as well as the multidisciplinary nature of
sustainability, there are different approaches in conceptual-
izing and operationalizing sustainability constructs. One
of the most commonly used measures are derived from
established sustainability indexes, such as the SAM Dow
Jones Sustainability Index, the KLD Social Index or the GRI
performance indicators. Most of these sustainability initia-
tives are developed as a normative frameworks or process
guidelines (Ligteringen and Zadek, 2005).
2.2 Organizational performance
The concept of organizational performance in literature
refers normally to financial aspects such as profit, return
on assets (ROA), return on equity (ROE) and economic
value added (EVA). While financial measures of perfor-
mance are among the most widely used by businesses,
many researchers have criticized the short-term thinking
and emphasize the importance of the non-financial com-
ponents of performance measurement (e.g. Kaplan, 1983;
Otley, 1999). Consequently, as a response to relatively
narrow point of view of performance measuring, a more
balanced approaches of performance measurement systems
(PMSs) to include financial and non-financial performance
measures, as well as explaining cause-and-effect relation-
ships between the various measures, and providing better
insight in terms of links between PMS and organization’s
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Organizacija, Volume 47
Research papers Number 1, February 2014
strategy have been proposed (Kaplan and Norton, 1996;
Neely and Adams, 2000). Thus the two most well-known
and frequently used models for performance management
– the balanced scorecard and the European Foundation for
Quality Management’s (EFQM) Excellent Model - reflect
the development. The key in developing these models
is to construct the multiple organizational performance
measures so that they are properly integrated and directed
towards achieving organizational goals and strategy. Various
Quality models, among others, Deming model and Malcom
Baldridge model are some forerunners of the integrated
performance management models of which focuses were
paid in multiple performance variables. In line with these
developments, Gomes et al. (2011) further suggest that
organizations should (among other performance measures)
also pay attention to softer performance measures, such as
social responsibility. Based on corporate social performance
and corporate financial performance, Fauzi et al. (2010)
proposed a multi-dimensional concept of triple bottom line
(TBL) as sustainable corporate performance.
Considering the academic perspective, a number of
studies have applied different ways to measure organiza-
tional performance. As a result, different measures of overall
organizational performance have been used to the same phe-
nomenon, i.e. overall organizational performance. The most
frequently used measures of organizational performance in
empirical studies are financial performance, market perfor-
mance, quality performance, product innovation, process
innovation, operational performance and customer satisfac-
tion (e.g. Lin and Kuo, 2011; Antony and Bhattacharyya,
2010; Fuentes-Fuentes et al., 2004). As pointed out by
Tangen (2003), different performance dimensions may have
to be combined to get a balanced and complete view of the
organization’s performance. For instance, Venkatraman and
Ramanujan (1986) consider three aspects of performance,
among them are financial performance, business perfor-
mance, and organizational effectiveness and the later have
been subsequently known as organizational performance.
They suggested that a broader conceptualisation of the
organizational performance would (in addition to financial
indicators) include operational indicators as well when
measuring the organizational performance. The operational
indicators may include such measures as new product intro-
duction, product quality, manufacturing value-added and
marketing effectiveness.
2.3 Sustainability and innovation
As stated by Klewitz and Hansen (2013), the debate on
organizations that strive to achieve the goals of sustainable
development through innovation was initially focused on
eco-innovations. In general, one can argue that eco-inno-
vations include several dimensions, such as: design dimen-
sions, user dimensions, product service dimensions, govern-
ance dimensions and the engagement of key stakeholders
in the innovation process (Carrillo-Hermosilla et al., 2010).
The ultimate goal of putting efforts to eco-innovations is
to provide new business opportunities and contribute to
a transformation towards a sustainable society (Carrillo-
Hermosilla et al., 2010). Generally, eco-innovations can be
divided in the three main categories, as follows (Rennings
et al., 2006):
nProcess innovations enable the production of a given
amount of output (goods, services) with less input. The
latter can be interpreted in terms of the eco-efficiency
(Côté et al., 2006) which aims to reduce the material
and energy intensity. Process innovations can be further
subdivided into innovations in end-of-pipe technologies
and innovation in integrated technologies categories
(Rennings et al., 2006).
nProduct innovations encompass the improvement of
goods and services or the development of new goods
categories (Rennings et al., 2006). It is suggested
that most of the sustainability-oriented product/service
innovations relate to incremental or evolutionary inno-
vation (e.g. remanufactured products, recycled content,
organic cotton-based clothing, and water-based paints)
(Pujari, 2006).
nOrganizational innovations include new forms of man-
agement systems. This could also include environmen-
tal management systems (Poksinska et al., 2003). More
recently, the trend has moved towards holistic sustain-
ability management system standards and guidelines
(Maas and Reniers, 2013).
Lately, the debate on sustainability and innovation has
expanded its focus to include a wide range of themes such
as sustainability-related innovation (e.g. Wagner, 2008;
Klewitz and Hansen, 2013), sustainable innovation (Boons
et al., 2013), CSR-driven innovation (e.g. Hockerts, 2008)
as well as the discussion regarding the development of more
sustainable management systems (Maas and Reniers, 2013).
3 Methods
3.1 Sample and data collection
A survey questionnaire was mailed to the managers of a ran-
dom sample of Slovenian organizations. To ensure a reason-
able response rate, the survey was sent in two waves. The
questionnaire with the cover letter indicating the purpose
and significance of the study was emailed to target respond-
ents. Managers were chosen because they were considered
to be familiar with the implementation of sustainability
practices and performance indicators.
A total of 116 usable responses were received from
a sample of Slovenian organizations. The profile of the
organizations and respondents is provided in Table 1.
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Organizacija, Volume 47
Research papers Number 1, February 2014
Table 1. Profile of the respondents in our sample
Sample distribution Percentage
Respondent profile Middle management 38.6
Frontline management 22.8
Top management 21.1
Data not available 17.5
Total 100 (N=116)
Organization profile (employees) 0–5 6.0
5–50 18.1
50–250 31.9
250–500 9.5
over 500 26.7
Data not available 7.8
Total 100 (N = 114)
3.2 Measures
Independent variables: sustainability-oriented innovation
practices. Although our study mostly used multi-item
scales that were verified through various analyses, appro-
priate scale for sustainability-oriented innovation practices
was not available. Hence, the domains of construct were
identified via a thorough review of the literature. Several
items were operationalized in relation to eco-innovation
activities in product development process (e.g. Pujari,
2006), stakeholder integration in product development pro-
cess (e.g. Seuring and Gold, 2013) as well as in relation to
business process improvements (e.g. Côté et al., 2006).
The items measuring sustainability oriented learning
and the development of competencies supporting innovation
were developed based on the literature review related to sus-
tainability and organizational learning (e.g. Lozano, 2011;
Siebenhuner and Anold, 2007; van Kleef and Roome, 2007).
Therefore, a diverse range of operationalizations has
emerged for the sustainability-oriented innovation practices.
The complete items of these scales are presented in Table 2.
Dependent variable: organizational performance.
While recognising that performance is multi-dimensional
concept (Chenhall and Langfield-Smith, 2007), we designed
our survey instrument to capture the most commonly studied
dimensions of organizational performance. The organiza-
tional performance sub-constructs were operationalised by
developing several items based on a literature review (e.g.
Baird et al., 2011; Kaynak, 2003; Martensen et al., 2007;
Prajogo and Sohal, 2003; Veleva and Ellenbecker, 2001;
Hutchins and Sutherland, 2008). Therefore, we understand
the concept of organizational performance to be composed
of the following sub-constructs: financial and market perfor-
mance, quality performance, innovation performance, envi-
ronmental performance and social performance. A resulting
four-item scale captures the extent to which organizations
achieve business success. A four-item scale measures qual-
ity performance and captures the extent to which organiza-
tions have improved quality of their products and services
during the last 3 years and meet customer satisfaction. A
four-item scale measures innovation performance in terms
of product and process innovation. A four-item scale meas-
ures environmental performance and captures the extent to
which organizations achieve efficiency of material and ener-
gy consumption. Finally, a four-item scale measures social
performance from the employee perspective (satisfaction,
motivation and turnover ratio). The corresponding items for
measuring the organizational performance are presented in
Appendix A.
4 Analysis and Results
4.1 Measurement and validation of
constructs
Sustainability-oriented innovation practices. The scales
for measuring sustainability-oriented innovation practices
were subjected into validity and reliability tests. The con-
struct validity was assessed merely using exploratory factor
analysis (EFA) based on oblique rotation (Direct Oblimin).
The scale reliability was tested by calculating its Cronbach’s
alpha. Additionally, we performed corrected item-total cor-
relations (CITCs) in order to strengthen validity and reliabil-
ity results. The results of the validity and reliability test are
presented in Table 2. The result of factor analysis supports
the validity of the two sub-constructs as indicated by the
amount of variance explained which exceeded 50%, and the
loading factors of all items within each scale exceeded 0.5
(Hair et al., 2010).
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Organizacija, Volume 47
Research papers Number 1, February 2014
Table 2. Scale validity and reliability
Factor Items Factor
loading CITC
SOPPD
We consider sustainability as an opportunity for product/service differentiation
.974 .733
Multiple departments (such as marketing, manufacturing, and purchasing) are
working together on sustainability related initiatives
.761 .610
The organization undertakes regularly business process reengineering with a focus
on green perspectives .753 .776
The organization makes improvements to radically reduce environmental
impacts of products and services’ life-cycles
.714 .773
Preliminary market assessments are made to obtain customers’ view of green product
ideas .655 .626
We search for external sources (e.g. partners, customers, research institutions) of
knowledge in our search for innovative ideas related to sustainability .643 .668
*The organization is characterised by a learning culture stimulating innovation for
sustainability .532 .749
*The business processes are flexible allowing us to achieve high levels of
responsiveness towards key stakeholder needs and demands
.503 .374
*The organization involves key non-market stakeholders issues (such as local com-
munities, general public, governments and NGOs) early in the product/service design
and development stage
.386 .473
SOICD We develop new competencies supporting innovation in the organization -.931 .752
We continuously try to strengthen innovation skills in key areas where we have no
prior experiences -.851 .755
The organization is constantly exploring new/different ways to understand the expec-
tations and requirements of key stakeholders -.814 .667
We acquire innovative environmental-friendly technologies and processes
-.656 .644
*The organization involves key market stakeholders (customers, suppliers) early in
the product/service design and development stage -.484 .496
*Excluded from further analysis
SOPPD - sustainability-oriented process and product deployment
SOICD - sustainability-oriented innovation competencies deployment
As shown in Table 2, the results show two factors with
eigenvalues greater than one, accounting for 58.168 % of the
variance (K-M-O statistic 0.891; Bartlett statistic 898.029;
significance 0.000). Thus, a model with two factors may
be adequate to represent the data. To ensure a convergent
validity a cut-off value of 0.6 and above is considered in
this study. The first factor shows the variables having a
common underlying dimension of ‘sustainability-oriented
process and product deployment (SOPPD)‘. The main vari-
ables, which load heavily on this factor, are related to the
eco-innovation activities in product development process as
well in relation to innovative sustainability solutions in busi-
ness processes. The second factor, named ‘sustainability-
oriented innovation competencies deployment (SOICD)’,
includes the variables related to developing new knowledge
and skills aiming to foster sustainability-related innovations.
The alpha coefficients have the acceptable value rang-
ing from 0.85 to 0.89, with the lowest value for the vari-
able SOICD and the highest value for the variable SOPPD.
Therefore, the alpha value for each construct was well
above the recommended value of 0.70, which is considered
satisfactory for exploratory research (Hair et al., 2010). As
shown in Table 2, the corrected item-total correlation scores
range from 0.37 to 0.78. The rules of thumb suggest that
the item-to-total correlations should exceed 0.5 (Hair et al.,
2010). Accordingly, some items are considered to be exclud-
ed from further analysis (in table marked with an »*«).
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Organizacija, Volume 47
Research papers Number 1, February 2014
Organizational performance. Organizational perfor-
mance measures were assessed via responses to the question
‘Please select the number (on a 5-point Likert-type scale)
that accurately reflects the extent of your organization’s
overall performance over the last three years on each of
the following‘. The following dimensions of organizational
performance were included in the questionnaire: financial
and market performance, quality performance, innovation
performance, environmental performance and social per-
formance.
In order to confirm the latent factor structure for meas-
ured variables, an exploratory factor analysis (EFA) was
performed using the principal components analysis (PCA)
with the Varimax rotation method. The results show five
factors with eigenvalues greater than one, accounting for
69.961% of the variance (K-M-O statistic 0.869; Bartlett
statistic 1497.571; significance 0.000). In order to guarantee
the convergent and discriminant validity, the low loading
items (< 0.6) were excluded from the subsequent data analy-
sis. Factor loading of organizational performance items are
presented in Appendix A.
4.2 Descriptive statistics
Prior to further statistical analysis, we first investigated the
descriptive statistics for study variables. Means, standard
deviations, and bivariate correlations are presented in Table
3. Observing the overall sub-constructs, we can see that the
highest mean value corresponds to the SOICD (3.94), while
the lowest value corresponds to the financial and market
performance (3.21). However, respondents’ organizations
appeared to be implementing sustainability-oriented inno-
vation practices to a relatively strong extent (means of 3.89
and 3.94, respectively).
As expected, the results indicated positive relationships
between sustainability-oriented innovation practices and all
organizational performance dimensions, with correlations
ranging from 0.32 to 0.56 (p < 0.01). Furthermore, SOPPD
shows the strongest correlation with the overall organi-
zational performance (r = 0.543, p<.001), and the lowest
correlation with the financial and market performance (r =
0.315, p<.001). Regarding the SOICD, the strongest cor-
relation was observed in the case of overall organizational
performance (r = 0.543, p<.001), while the lowest value was
found in the correlation between SOICD and environmental
performance (r = 0.333, p<.001).
4.3 Regression analysis
First, mean scores were calculated from the scale’s items
to generate the composite scores for the organizational
performance. This newly created composite variable was
subsequently used in the regression analysis. Furthermore,
the normality of the composite score was checked and the
result indicated no major violation, with skewness and
kurtosis values well within the accepted range (± 1 and <3,
respectively). Additionally, the Kolmogorov-Smirnov test
of normality supports the aforementioned arguments (K-S
= 0.057, p = 0.200).
Table 4 summarises the regression results for the effects
of sustainability-oriented innovation practices on the organi-
zational performance.
The results in Table 4 show that the overall regression
model is significant with an F value of 33.047 (P = 0.000).
Furthermore, to examine multi-collinearity, we calculated
variance inflation factors (VIF) for the regression equation.
The VIF for the Model 1 was 1.62, which is well below the
rule-of-thumb cut-off of 10 (Field, 2005).
Table 3. Means, standard deviations and correlations
Mean SD (1) (2) (3) (4) (5) (6) (7)
(1) SOPPD 3.89 .76
(2) SOICD 3.94 .75 .617**
(3) Organizational performance 3.48 .66 .543** .561**
(4) Financial and market perfor-
mance 3.21 .91 .315** .361** .829**
(5) Quality performance 3.81 .68 .335** .459** .708** .526**
(6) Innovation performance 3.48 .96 .472** .510** .847** .686** .504**
(7) Environmental performance 3.54 .82 .494** .333** .709** .464** .347** .493**
(8) Social performance 3.33 .86 .479** .494** .752** .478** .481** .520** .424**
**. Correlation is significant at the 0.01 level (2-tailed).
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Organizacija, Volume 47
Research papers Number 1, February 2014
Table 4. Results of regression analysis: SOPPD, SOICD, and
organizational performance
Dependent: organizational performance
Model
SOPPD 0.315**
SOICD 0.364**
R² 0.375
Adjusted R² 0.364
F 33.047
P-value of overall model 0.000
**P < 0.01
As shown in Table 4, the results of the regression
analysis suggest that both sub-constructs of sustainability-
oriented innovation practices have a significant relationship
with organizational performance (β = 0.315, p < 0.01; β =
0.364, p < 0.01 respectively). R square shows that 38% of
the variation in organizational performance is explained
by the sustainability-oriented innovation practices. Thus,
the basic premise which suggests a positive relationship
between sustainability practices and organizational perfor-
mance is supported.
5 Discussion and conclusions
Debates relating to corporate sustainability are becoming
important subjects of the wide range of management litera-
ture in this century (Asif et al., 2011). Organizations are con-
fronted with environmental and social issues in their deci-
sions, not only to take into account moral and legal responsi-
bility that need to be encouraged (Takala and Pallab, 2000),
but also to ensure sustainable economic success (Wagner,
2010; Koo et al., 2013). Although researchers have widely
discussed the relevant issues of sustainability-oriented inno-
vation (e.g. Wagner, 2008; Klewitz and Hansen, 2013), there
is a lack of empirical evidence on the relationship between
these activities and overall organizational performance. To
fill this existing research gap, this research proposed a novel
construct – sustainability-oriented innovation practices - and
developed a research framework to further discuss the effect
of these practices on the organizational performance.
Furthermore, our study underscores previous assertions
that organizations can benefit from pursuing sustainabil-
ity (e.g. Schaltegger and Wagner, 2006). The results of the
regression analysis have confirmed the premise that sustain-
ability practices positively influence the organizational per-
formance. As such, the study provides empirical evidence
indicating that organization can benefit by obtaining and
deploying sustainability-oriented innovation practices. In
particular, the results of this study suggest that organiza-
tional learning in terms of developing new sustainability-
oriented innovation competencies can provide superior per-
formance benefits to the organization. Indeed, several prior
studies have suggested that organizational learning with
regard to innovation can contribute positively to the sustain-
ability (e.g. Lozano, 2011; Siebenhuner and Anold, 2007).
In this regard we can argue that developing capabilities and,
therefore, acquiring the intangible assets, is essential for
future growth and it is needed to successfully integrate and
embed the sustainability in every aspect of the organization.
Furthermore, the results of this study indicate that
organizations can benefit from integrating sustainability
aspects in their products and processes, as reflected by the
positive and significant effect of SOPPD on the organiza-
tional performance. These findings are somewhat support-
ing the argument that incorporating sustainability activities
in product and process development can provide tools and
mechanisms to organizations to enhance their economic
benefits without affecting environment and communities
(Pujari, 2006; Schrettle et al., 2013). Therefore, our study
leads us to suggest that organizations should built sustain-
ability aspects into tangible and intangible product/process
quality characteristics, through a constant focus on stake-
holders’ wants and needs, and on the basis of principles of
continuous improvement.
5.1. Theoretical contributions and managerial
implications
While drawing on earlier work on performance implica-
tions of sustainability management activities (e.g. Wagner,
2008), this research contributes to the literature by focus-
ing on the link between sustainability-oriented innovation
practices and organizational performance (e.g. Antony
and Bhattacharyya, 2010). Seen in this context, the main
theoretical contribution of this study is reflected through
the proposal of a novel construct – sustainability-oriented
innovation practices - and the successful verification of the
effect of these practices on the organizational performance.
Additionally, this study considered “sustainability-oriented
process and product deployment” and “sustainability-ori-
ented innovation competencies deployment” as the two
sub-dimensions of the newly developed construct. This is
significant because so far there are only a few empirically
based studies that investigate sustainability-related innova-
tions and its performance implications. In this regard, this
work can contribute to a better understanding of the under-
lying dimensions of sustainability-oriented innovation and
its relationship with the overall organizational performance.
The developed research framework and empirical evidence
from this study can provide useful reference for further stud-
ies to investigate the relevant literature regarding corporate
sustainability, innovation, and performance.
In addition, our results also have significant managerial
implications. First, organization’s competitive advantage
can be achieved by focusing on its environment, includ-
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Organizacija, Volume 47
Research papers Number 1, February 2014
ing its customers’ needs and other stakeholders’ demands
as well as by interacting with potential partners. Among
others, this also requires from organization to change the
view of the customer from a passive participant to an active
contributor in product development (Witell et al., 2011).
Therefore, managers should encourage employees to under-
stand stakeholders’ present and future needs as well as to
pursue knowledge that is outside the scope of their organi-
zation. Considering the intra-organizational creation of
new knowledge, managers should take into account cross-
functional integration in order to enable employees to share
existing knowledge and develop new sustainability-oriented
innovation competencies.
Second, the capability of an organization to create
innovative and sustainable solutions (i.e. process innova-
tions, product innovations and service innovations) can
be viewed as organizational resource. Therefore, manag-
ers should establish an efficient mechanism to sustain this
asset and effectively use it to enhance performance and
gain competitive advantages. Accordingly, managers should
strive to achieve sustainable innovation excellence in terms
of developing innovative new products or services in a way
which both in the short term and in the long run satisfies the
customers and other stakeholders, such as employees, sup-
pliers and society, in a balanced way (Dahlgaard-Park and
Dahlgaard, 2010).
5.2. Limitations and future studies
As with all empirical studies, there are a number of limita-
tions and directions for future research. First, the scales that
were used to measure the construct ‘sustainability-oriented
innovation practices‘ capture only limited dimensions of
innovation-related themes. Future research needs to exam-
ine the usefulness of additional measures. Secondly, due to
a relatively small sample size, care should be taken while
generalizing the results. Future research on sustainability-
oriented innovation could also be more specific in estimat-
ing the relative contribution of each of the sub-constructs
to the particular dimension of organizational performance
(e.g. comparison of the effects of SOPPD and SOICD on the
financial and market performance). Therefore, the results
of this study can stimulate further development of theory
building and conceptual development within the interdis-
ciplinary field of corporate sustainability, quality manage-
ment, innovation, and performance.
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Matjaž Maletič is a teaching assistant at Faculty of Organizational
Sciences, University of Maribor. His main research interest
concerns the quality management, corporate sustainability,
integration of quality management and sustainability as well
as the overall organizational performance. He holds a bach-
elor’s degree in Wood Science and Technology (University
of Ljubljana) and Organization (University of Maribor). He has
defended his PhD thesis in September 2013 at the University of
Maribor, Faculty of Organizational Sciences.
Damjan Maletič is teaching assistant and researcher at the
Faculty of Organizational Sciences, University of Maribor. His
research activities are mainly devoted to the fields of mainte-
nance management and quality management. At present, his
research is focused on studying the interaction between quality
management, production and maintenance performance. He
holds a bachelor’s degree in Wood Science and Technology
(University of Ljubljana) and Organization (University of Maribor).
He is currently a PhD student at the University of Maribor,
Faculty of Organizational Sciences.
Jens J. Dahlgaard is Professor Emeritus and previously
chair professor at the Division of Quality Technology and
Management at Linköping University, Sweden, and before that
he was chair professor at Department of Quality Management at
the Aarhus School of Business, Denmark where he build up the
first master program in Quality Management in Europe. During
this period he was also active as one of the founders of The
Danish Quality Award and also one of the founders of EUN.TQM
(European University Network in TQM). He has received several
awards and has been invited as distinguished visiting professor
at many European and Asian universities. He is a member of
the International Academy for Quality (IAQ), he is also elected
as the first president of EAQS (European Academy for Quality
Sciences). He has published 15 books and over 100 research
articles. He serves on the editorial boards of several interna-
tional journals and is currently editor of the journal Total Quality
Management & Business Excellence (TQM&BE). Professor
Dahlgaard is one of the founders and chairman of the yearly
QMOD conferences (Quality Management and Organisational
Development) – one of the world’s largest research conferences
on Quality and Service Sciences.
Su Mi Dahlgaard-Park is currently professor at Institute of
Service Management, Lunds University, Sweden. Her research
areas have been HRM, Quality Management, Organization
Theory, Learning and Knowledge Management, and
Organizational Change. Within these areas she has published
more than 100 research papers and numerous books. She
is elected as academician of IAQ (International Academy for
Quality) and co-founder and co-chair of the International QMOD/
ICQSS (Quality Management and Organizational Development)
Conference during the last 13 years. She is a frequent keynote
speaker at International conferences and has been invited as
distinguished visiting professor in many European and Asian
universities.
Boštjan Gomišček is associate professor at the University of
Maribor, Faculty of Organizational Sciences, Slovenia. As head
of the Laboratory for Quality Management he is predominantly
engaged in the following research fields: quality management,
maintenance management and environmental protection.
13
Organizacija, Volume 47
Research papers Number 1, February 2014
Appendix A
Measurement items – organizational performance
Financial and market performance Factor
loadings
*PERF1. Return on investment (ROI) has increased above industry average during the last 3 years 0.587
PERF2. Sales growth has increased above industry average during the last 3 years 0.833
PERF3. Profit growth rate has increased above industry average during the last 3 years 0.799
PERF4. Market share has increased during the last 3 years 0.750
Quality performance
*PERF5. The quality of our products and services has been improved during the last 3 years 0.516
PERF6. Customer satisfaction has increased during the last 3 years 0.634
PERF7. Customer complaints has decreased during the last 3 years 0.859
PERF8. The cost of poor quality has decreased during the last 3 years 0.785
Innovation performance
PERF9. The organization has introduced more innovative products and services than our main competitors dur-
ing the last 3 years
0.730
PERF10. Our new products and services are perceived by our customers as innovative 0.714
PERF11. The speed of adoption of new technology is faster than at our main competitors 0.690
*PERF 12. The number of innovations that provide the organization with a sustainable competitive advantage
has increased during the last 3 years
0.570
Environmental performance
PERF13. The efficiency of the consumption of raw materials has improved during the last 3 years 0.717
PERF14. The resource consumption (thermal energy, electricity, water) has decreased (e.g. per unit of income,
per unit of production, …) during the last 3 years
0.758
PERF15. The percentage of recycled materials has increased during the last 3 years 0.768
PERF16. The waste ratio (e.g. kg per unit of product, kg per employee per year) has decreased during the last 3 years 0.696
Social performance
PERF17. The turnover ratio has decreased during the last 3 years 0.706
PERF18. The employees’ satisfaction has increased during the last 3 years 0.795
PERF19. The employees’ motivation has increased during the last 3 years 0.760
*PERF 20. Health and safety performance has improved during the last 3 years 0.665
*PERF 21. Employee education and training (man-days per employee per year) have increased during the last 3 years 0.539
*Excluded from further analysis
