Be Sustainable to Be Innovative: An Analysis of Their Mutual Reinforcement

Sustainable development has attracted the increasing attention of both researchers and practitioners. While academicians and practitioners' focus towards sustainability has shifted to innovation, there is a need to understand how sustainability and innovation are interlinked. Thus, this paper attempts to analyze, first, the bidirectional impact of the firms' pursuit of sustainability and innovation as the priority, second, the bidirectional impact of the adoption of sustainability innovation action programs and, third, to discern the bidirectional influence of sustainability and innovation performances. The evidence is drawn from a sample of 860 manufacturing plants in 22 countries from the sixth edition of the International Manufacturing Strategy Survey 2013. The survey was conducted using a self-administered questionnaire. Structural equation modelling has been employed to test the model. The results show that sustainability and innovation positively and significantly impact each other in terms of the adoption of their relevant action programs and performance. However, the pursuit of sustainability priority acts as an antecedent of innovation priority.