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K. Jarmai (ed.), Responsible Innovation, SpringerBriefs in Research and
Innovation Governance, https://doi.org/10.1007/978-94-024-1720-3_2
Chapter 2
Responsible Innovation inBusiness
KatharinaJarmai, AdeleTharani, andCarolineNwafor
Abstract This chapter introduces responsible innovation in a business context. The
rst part explains the basic terms that constitute responsible innovation from a busi-
ness perspective. The second part presents tangible business practices that opera-
tionalise responsible innovation and introduces two good practice examples that
hint at the variety of ways in which responsible innovation can be implemented in
companies.
Keywords Responsible research and innovation · Responsible innovation ·
Corporate social responsibility · Applied nanoparticles · Yoti · B Corporation
2.1 Introduction
“So, do you mean that I am irresponsible?”
This is the response you may get when you ask an entrepreneur if they would like
to make their company’s innovation processes and innovative products more respon-
sible. Once you start explaining the elements of the responsible innovation (RI)
concept, your conversation partner will likely relax and conrm that yes, consumer
trust, ethical conduct or safety considerations are indeed of interest to their com-
pany, and that yes, they would be interested in hearing more about how they can
decrease the risk of failing to meet consumer wants, or being blamed for undesirable
side-effects of her company’s innovation at a later point in time.
This chapter presents the contents of the conversation that could follow. To break
down the concept of RI into practices that make sense in a business context, we rst
explore the two elements of RI, i.e. responsibility and innovation, from a business
management perspective (Sect. 2.2). We then present RI as a collection of tangible
K. Jarmai (*) · A. Tharani · C. Nwafor
Institute for Managing Sustainability, WU Vienna University of Economics and Business,
Vienna, Austria
e-mail: katharina.jarmai@wu.ac.at; adele.tharani@wu.ac.at; caroline.nwafor@wu.ac.at
8
company practices (Sect. 2.3) and introduce two companies that have already
implemented many of these practices in their own particular way (Sects. 2.3.1 and
2.3.2). To conclude, we summarize main learning about RI in a business context
(Sect. 2.4).
2.2 Dening “Responsibility” and“Innovation” inaBusiness
Context
2.2.1 Responsibility
Business responsibility towards society has a longer history in business manage-
ment literature than the idea of responsible innovation, or responsibility of science
towards society. For a long time primary responsibility of business was dened only
in economic terms– responsibility towards shareholders and the responsibility to
make prot. The discourse on the extension of business’ responsibility to stakehold-
ers and broader society can be traced back to the 1950s and 1960s (Carroll and
Shabana 2010), with scholars such as Howard R.Bowen (1953) and Peter Drucker
(1954), who discussed the moral and ethical responsibilities of a business, and as
such a business manager, towards society and the public good. The responsibility of
business towards society has carried a number of conceptualisations, including phi-
lanthropy, business ethics, corporate social responsibility, corporate citizenship and
corporate sustainability (Carroll and Shabana 2010). Corporate social responsibility
(CSR) and corporate sustainability (CS) are currently the more common terms in
business practice and are showing signs of convergence (Montiel 2008), yet so far
have no xed standardised denition (Montiel and Delgado-Ceballos 2014). In
essence, business’ responsibility to society can be linked to three main theories:
stakeholder theory, social contracts theory and legitimacy theory (Moir 2001).
The concept of business responsibility has evolved from the philanthropic
approach of “giving back”, to a more strategic approach to business’ responsibility
towards society being addressed in management literature. Since the early 2000s
scholars have started to connect business’ strategic economic goals with business’
roles and responsibilities towards society, with numerous studies examining the
“business case of CSR” (Carroll and Shabana 2010). Porter and Kramer (2011)
argue that by acting responsibly and gearing a business towards responding to soci-
etal needs, business can simultaneously serve its economic and societal responsibil-
ity and introduced the idea that business is a force that can “create shared value”.
Their idea brought business responsibility from the fringes of the company to the
core of business strategy (Crane etal. 2014). Company responsibility was no longer
seen as an activity outside a company’s core operations and core competencies, but
rather as responsiveness to societal needs through creating products and services,
which became a potential avenue for business growth. One can argue that this shift
from responsibility as an afterthought to responsibility as a strategy also fuelled the
K. Jarmai et al.
9
increasing replacement of the term corporate social responsibility with corporate
sustainability. The latter signies that responding to societal needs and acting
responsibly towards people and the environment is a precondition to business
survival.
Recent years have seen a strong societal push to acknowledge that businesses’
value chains, from sourcing of raw materials to production, sales and product end-
of- life, cause impacts on people and the environment for which they are responsible.
Therefore, the European Commission, as well as other public actors, has redened
what CSR means, from a “company voluntary contribution to society”, to company
“responsibility for its impacts” on society (European Commission 2011), including
people and the environment.
With these societal pressures, the understanding and conceptualisation of
company responsibility towards society now encompasses a number of issues,
themes and business activities. Companies from a variety of sectors are being
scrutinised for their effects on people and the environment throughout their value
chains (Phillips and Caldwell 2005); extending their responsibility for impact
beyond their own operations to supply chains and product use. This includes
materials sourcing and procurement in supply chains, production, transport and
packaging, and lastly the life-cycle effects from the actual use of the product, and
its disposal or afterlife. The issues range from environmental resource use or
emissions into air, land or water, to effects on human rights, ensuring decent work
and health and safety in company production or operations, ensuring an environ-
mentally friendly afterlife of company products or even the social desirability of
a company’s products and services. Therefore, business responsibility towards
society now means both, responsible management of business operations, as well
as a business’ responsibility for the impacts of its products and services on people
and the environment. Companies globally are being expected to take responsibil-
ity for doing no harm to people or the environment, whereas the most advanced
ones are looking into strategies that drive the business through responsiveness to
societal needs.
2.2.2 Innovation
The story of innovation often begins with the economist Joseph Schumpeter
(1883–1950) and is thus deeply rooted in socio-economic theory. For Schumpeter
(1939), economic development was a dynamic process driven by the development
of novel1 combinations– innovations– which in processes of creative destruction
1 Denitions of innovation differentiate between the scopes of novelty. While Kieser (1969) denes
innovation as novelty at the level of an organization, according to Vedin (1980: 22) innovation is
“…an invention brought to its rst use, its rst introduction to the market”. Garcia and Calantone
(2002) identify six perspectives of novelty in the innovation literature current at the time: New to
the company, new to the adopting unit, new to the market, new to the industry, new to the consumer
and new to the world.
2 Responsible Innovation inBusiness
10
generate new business models. Innovation can arise in the form of a new product
formerly unknown to the consumer, but also in the form of a new quality of an
existing product. Likewise, innovation can emerge in the form of the introduction of
a new production method, an opening up of new sales markets, the development of
new sources of raw materials or a re-organization of a business already in the mar-
ket. In any form, innovation allows businesses to occupy a temporary monopoly
position, which lasts until competing businesses either successfully imitate the
innovation or gain supremacy through further or novel developments.
From an economic point of view, innovation is generally conceived as the basis
for a competitive economy (cf. Adams etal. 2006) and thus as something that is
inherently desirable in the present perception of the western industrialized world
(cf. Blok and Lemmens 2015; Moldaschl 2010). Companies pursue innovation to
develop new market segments, improve the quality of their products or reduce the
costs of production. They aim to maintain their competitive edge or improve their
position in the market through innovative products (goods and services), innova-
tive processes (production or delivery methods), innovative marketing (design,
packaging, placement, promotion, pricing) or organisational innovation (business
practices, workplace organisation, external relations). In this constant race for nov-
elty and improvement only those that constantly reinvent themselves and their
products can win. An innovation’s success is, however, measured in terms of its
uptake on the market and its generation of economic prot for the owner of the
innovation. Societal benet may arise as positive externalities of innovation, but
are not per-se decisive for action. In this way, innovations can be a source of income
for the innovation owner and at the same time lead to job losses, or cause short- or
long-term environmental, health or safety issues that may or may not become
apparent at the time of the innovation’s introduction to the market. This fact has
found its countermovement in approaches to substitute solutions on the market
with more eco- friendly, more sustainable or more socially desirable ones (see
Chaps. 3and 4 for an introduction to these types of innovation), and thus combine
the pursuit of competitiveness with a normative requirement to reduce harm to
people and the natural environment.
Innovation management in companies is mostly concerned with creating fruitful
environments for new ideas, and deciding which of these ideas will be pursued fur-
ther and which are to be discarded. This means that not every new idea will neces-
sarily turn into, or lead to, innovation2. It also means that innovation management is
constantly concerned with creating opportunities for innovation through the formu-
lation of new ideas, and destroying opportunities for innovation by discarding a
large proportion of these ideas before they reach the market, or even the develop-
2 Different authors consider different events as decisive for dening innovation: According to
Roberts (1987), innovation takes place when an introduction to the market is followed by com-
mercial exploitation, application, diffusion and further development; an innovation needs to be
successful on the market and create value in order to earn the name. Brockhoff (1992), in contrast,
considers market entry to be sufcient criterion for product or process innovation; irrespective of
its level of commercial success.
K. Jarmai et al.
11
ment phase. Management literature has extensively discussed approaches to estab-
lishing an innovation culture within an organization, the pros and cons of involving
company external actors and the selection process of one idea over another. These
discussions are too versatile to be reproduced in this chapter. It should be noted,
however, that decisions to pursue one idea and discard another are generally taken
under high levels of uncertainty about potential success. The higher the dynamics in
a particular market and the more radical3 the innovation, the higher the levels of
uncertainty will be. Well-known management approaches to decrease uncertainty
through utilising information from company-external sources include open innova-
tion, user innovation and innovation communities (Fichter 2009; Chesbrough etal.
2006; Gassmann and Enkel 2004; von Hippel 1986).
In contrast to a few decades ago, today a company can fall back on various meth-
ods to support both the idea generation process as well as the selection of ideas for
further development. Many of these methods have been developed by companies
and now nd their way into both the practitioner and academic literatures. These
range from “classic” methods such as brainstorming to more recent development
such as design thinking, the “innovation sprint” (cf. e.g. Ma and Morris 2017), or
gaming approaches.
2.3 How Should Companies Be(come) Responsible inTheir
Innovation Activities?
Once an entrepreneur’s interest in responsible innovation has been stirred, they will
probably have two pressing questions: ‘What exactly do I need to do?’ and ‘What’s
in it for me and my business?’ Innovation is usually closely connected to the core
business of a company, and different companies operate under different conditions
(depending on e.g. business model, size, product and contextual factors such as
legal frameworks or sector dynamics), so there are no universally valid answers to
these questions. It is, however, possible to describe a general process to develop a
tailored RI strategy and point out resources that companies can rely on. The follow-
ing ve steps provide guidance to a company wishing to engage with RI:
1. Understand what responsible innovation is all about. While you may not have
heard of the concept of responsible innovation, your company may already be
doing things that fall under the concept of RI.You can gure out in which areas
of your operations RI might be particularly important, nd out what your current
strengths are, and what action you may want to take. One way to self-assess your
3 While incremental innovations are born along existing paths of (technological) development and
improve the performance of existing products or processes, radical innovations are disruptive in
their nature and create path changes. Radical innovation is generally followed by a multitude of
incremental innovations, and often by organisational or societal changes (cf. e.g. Utterback 1996).
2 Responsible Innovation inBusiness
12
company is using the COMPASS online self-check tool4. Another way is reect-
ing together with a responsible innovation expert.
2. Reect on the expected benets of responsible innovation. The implementa-
tion of RI will take time, may require additional investments and will likely
require changes in company practices. It could result in the (re-)denition of
company values, goals or collaboration patterns. It might even affect the com-
pany’s business model, if people realize that core business activities are not in
line with the objectives of RI.A company will only invest in these efforts if a
particular added value can be expected. This added value can be measured in
terms of e.g. improving customer relationships, pro-actively meeting expected
future regulation, or increasing the company’s positive impact on society. This
will differ between sectors, regions and individual companies. The crucial point
is to understand what pursuing RI may yield and what the company is willing to
invest to this end.
3. Establish management and employee commitment. To ensure that time and
money is allocated to employees’ engagement with RI, and that practices are
actually implemented, both top management as well as employees need to com-
mit to pursuing RI.Such commitment can, for example, be facilitated through
inclusive development of a company Code of Conduct that respects RI (see Sect.
2.3.2), or providing employees with training in RI.
4. Develop an action plan for development/adaptation of practices. Once a
company has a clear idea of where it stands, and commits to making a step
towards RI, an action plan can be developed. First, identify contextual factors
that will likely shape your company’s working context, potential markets, soci-
etal trends, workforce and collaborations in the middle- to longer-term future.
Then identify practices and milestones, and specify responsibilities and dead-
lines. Potentially, you could develop indicators and procedures for monitoring
progress. If you already apply suitable methods for taking these steps in your
company, make use of those. If you are not familiar with any suitable methods,
you could utilize e.g. the COMPASSco-creation method kit5 or procure the ser-
vices of a consultant or facilitator.
5. Stay focused on the objective of responsible innovation. Different aspects of
RI will seem more relevant than others, depending on the company and the con-
text it operates in. Some practices will be more intriguing in terms of expected
added value. Nevertheless, it is important to implement practices that are the
most important and critical in that sector, and which cover different aspects of RI
4 The COMPASSself-check tool allows companies to nd out what they already do that qualies
as responsible innovation and what they could do to improve their responsible innovation perfor-
mance. All proposed practices are entirely within company control and can be put into practice
one-by-one or in combination. The tool has been available free of charge at https://innovation-
compass.eu/self-check/ since March 2019.
5 The COMPASS co-creation method kit provides detailed instructions on how to conduct (a) a
forward-looking exercise to identify future relevant company context and important responsible
innovation practices and (b) a back casting exercise to develop an actionable roadmap for the com-
pany. It has been publicly available at https://innovation-compass.eu/method-kit/ since March 2019.
K. Jarmai et al.
13
to keep pursuing the overall objective, which is to increase positive societal
impact and minimize actual and potential negative impact to the highest degree
possible. Keep re-evaluating your company practices and adapting your action
plan at regular intervals to respond to changing contextual factors, technological
advances and company developments.
The next two sections of this chapter present two companies that have success-
fully completed these ve steps towards responsible innovation6. The two good
practice examples hint at the variety of ways in which RI can be implemented in
companies. One of them details the various practices that a nanotechnology com-
pany has introduced to ensure that all of its research and innovation processes and
products exceed the requirements of RI, the other demonstrates how a cyber security
company relies on the principles of RI to inform their decision-making processes.
2.3.1 Good Practice Example 1: Responsible Innovation
asaBusiness Model7
Applied Nanoparticles SL (AppNps) was founded in 2013, arising as a spin-off
company from the Universitat Autònoma de Barcelona (UAB), the Institut Català de
Recerca i Estudis Avançats (ICREA), and the Catalan Institute of Nanoscience and
Nanotechnology (ICN2), with the goal to base the research and development of
nanoparticles on Responsible Research and Innovation (RRI) principles. AppNps’s
main product is BioGAS+, which is an additive based on iron nanoparticles directed
to the optimisation of anaerobic digestion processes. The main aim of BioGAS+ is
to transform waste into appealing raw materials in an efcient and sustainable way.
AppNps’s company structure exhibits several features that demonstrate its com-
mitment to the principles of responsible innovation. There is a collective ownership
of the company without an explicit CEO.Employees are involved in decision- making
with the objective of keeping the company diverse and robust; and to ensure that the
initial aims of the company are preserved. This is what AppNps refers to with their
slogan “a company in the making”. Their second slogan, “a company with purpose”,
refers to the collectively agreed upon vision to become a role model in terms of
responsible innovation and nanoparticles. Aware of the need for communication
between science and society for a smooth introduction of nanotechnology in society,
AppNps is a strong advocate of science education and a pronounced stakeholder
6 Both cases were developed according to the requirements of Sage Business Cases (http://sk.sage-
pub.com/cases) and will be published in 2020. Each case consists of an introduction to nanotech-
nology or cyber security, respectively, an introduction to responsible innovation, the case, expected
learning outcomes and discussion questions. Both cases are further accompanied by a teaching
note that describes teaching objectives, target audience, suggested teaching strategy and suggested
answers to the discussion questions.
7 The complete case study is available athttps://innovation-compass.eu/training/cases/
2 Responsible Innovation inBusiness
14
dialogue. Efforts to act responsibly are further implemented through implementation
of safety and health regulations that go beyond compliance and employee’s educa-
tion on nanotoxicity and nanosafety. On the whole, AppNps continually monitors
that actions are directed to seek social, economic and environmental sustainability.
AppNps constantly need to balance scientic and commercial interests and
tackle the challenge of involving society in a way that benets both society and the
company. The company is willing to engage themselves with ethical dilemmas,
such as the ethical dimension of growing crops when this could potentially affect
food security negatively. These questions require AppNps to constantly reect and
re-evaluate its values and strategies.
2.3.2 Good Practice Example 2: Responsible Innovation
asaDecision Support System8
Yoti9 is a London-based information technology company which was founded in
2014. It employed over 200 people in 2018 and has ofces in India, the US and
Canada. Yoti brings together the advance in biometric technologies and an
increased smartphone usage to create a digital identity solution that allows online
users to prove who they are without compromising their privacy. More speci-
cally, the main company product in an app that combines biometric information
with a government- issued identity document (passport, driving license, etc.). The
app was launched in 2017 and was downloaded more than 1.5 million times
within the rst half year. The Yoti app is benecial both for organisations– to
verify online and in person who people are– and for individuals– to prove their
age or identity with their smartphone.
Yoti aims to have a positive impact on society and has the goal to become the
world’s most trusted identity platform. The rm is well aware of the responsibility
that goes along with handling personal data and thus considers data responsibility to
be a core strategy of the business model. This is achieved by asking users to provide
only a minimal amount of data in the rst place and by implementing a system that
encrypts and stores the data separately, so that only the individual users can tie
together all the data. Moreover, Yoti has put several principles in place to ensure a
maximum amount of transparency and consumer trust. These principles include
continually considering the rm’s impact on users, employees, suppliers, partners
and the environment; providing a digital identity to anyone for free; and disclosing
terms and conditions in a transparent way. To watch over the compliance with these
8 As acyber security B Corporation based intheUK, Yoti wasinvited toparticipate intheCOMPASS
project in 2017. Yoti was highly active in co-creating the Responsible Innovation roadmap
forcyber security, andhas since been inclose contact withtheCOMPASS Consortium foradvice
onquestions related toethics and transparency, andtospread word about data trust andsecurity
issues.
9 https://www.yoti.com/
K. Jarmai et al.
15
principles, Yoti has installed a “Guardian Council”10. The principles are practically
applied by an intense stakeholder collaboration, an engagement with digital policy,
digital identity and data protection advocates and by committing to standards
beyond legal requirements.
Inherent to the collection and storage of data there are multiple challenges. First
and foremost, this is the issue of data privacy. In contrast, from a perfect privacy of
user data arises the possible implication of facilitating illegal activity. Minimizing
the risk of criminal misuse while maintaining data security is a major challenge that
has been tackled in an extensive dialogue with human rights and consumer rights
experts.
2.4 Chapter Conclusions
Responsible innovation, albeit born in the public policy realm and to date adopted
primarily by research institutions, is highly complementary to the broad concept of
business responsibility towards society. From the process dimension it allows the
extension of the concept of responsible business management to research and develop-
ment (R&D) departments, and guides businesses in how to make their R&D more
responsible and responsive to societal needs. Traditional approaches to CSR have not
as yet extensively considered the R&D stage as a crucial one in which responsibility
aspects should be integrated and considered. Furthermore, from an outcomes perspec-
tive, innovation and R&D intensive rms, especially those whose customers are inter-
mediaries and not the ones who will use the product or service, have not often
considered how their innovations affect society. They may have looked at their sourc-
ing and manufacturing process but paid less attention to what effects may be caused for
people or the environment once their products or services are utilised. With the RI
concept, these considerations of the effects on society and how to best serve to society
enter the R&D functions in companies. The concept is also promising in addressing the
core business responsibility for companies in sectors that are innovation-intensive.
While innovation itself has no normative orientation, some companies have
made it part of their strategies or business models to innovate in order to reduce the
negative impacts of their products or services on people and/or the environment. As
an innovation management strategy, responsible innovation can be understood as a
measure to reduce the risks of innovation failing to meet consumer wants, missing
out on potential markets, or costly adaptations or roll-back at late points in the inno-
vation process, while simultaneously increasing public credibility, legitimacy and
trust of the company and its innovative products or services. All of which corre-
spond to making innovative businesses more competitive.
The examples of AppNps and Yoti show that businesses can develop their own
approaches and work out RI practices that suit them in their particular contexts.
10 https://www.yoti.com/about/council/
2 Responsible Innovation inBusiness
16
Even though the two companies are vastly different, and the key issues of responsi-
bility in their innovation processes are also different, both AppNps and Yoti have,
(1) understood what RI in their specic context is and what are the most critical
elements to address; (2) reected on the potential benets of RI for their specic
case; (3) established management and employee commitment to RI; (4) established
an action plan and roadmap to RI.The companies have in common a basic interest
in creating positive societal impact. They both want to go beyond what is legally
required of them in terms of safety, security or ethical issues. They want to play an
active role in shaping the regulatory environment for their current and future busi-
ness undertakings. Even though, like any other small enterprise, personnel time is
among their scarcest resources, they invest time and effort into deliberation within
and beyond company boundaries and into putting new practices and routines into
place. Even though there are no numbers (yet) to predict a monetary return on these
investments, both companies are committed to traveling this path and reaping eco-
nomic prots based on the principles of responsible innovation.
Rather than implementing a top-down initiated policy concept, RI in companies
concerns company values, innovation practices and interaction with consumers and
other external stakeholders. If we accept that the RI concept is currently not tailored
towards businesses, but that businesses are willing to implement elements of RI
once they understand the benets for their own business strategy as well as towards
society, then a promising manner to approach implementation would be to build on
what businesses are already doing– either individually or in sectoral initiatives–
and provide them with information as well as with tools to explore other aspects of
RI.Implementation strategies are highly likely to vary between sectors, application
areas or even between individual businesses. Learning from “responsible innovation
pioneers” among peers can constitute an important rst step towards understanding
how RI can be made operational in a business context.
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