5/13/2021 Sustainability
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9.4 Sustainability and Innovation
LEARNING OBJECTIVE
Discuss how sustainability can drive innovation.
Shifts in thinking about international business and in behaviors related to sustainability are changing the
competitive landscape. To keep up, companies need to change the way they think about products, technologies,
processes, and business models. In fact, innovative thinking is what brought companies out of the 2008 financial
crisis and is what will bring them out of future crises. By innovating for sustainability, early movers will develop
organizational capabilities that competitors will struggle to match. This process starts with companies learning to
recognize opportunities rather than focusing solely on reducing risk.
Companies that already possess this competitive advantage have typically gone through four distinct stages. Each
stage is increasingly more difficult to navigate and requires firms to develop new capabilities, but being able to
move through all the stages can help them be the winners in the global game of goods and services. What are the
four stages?
Stage 1: View Compliance as Opportunity
The first step companies usually take is complying with existing laws aimed at protecting the environment. This is
sometimes difficult because laws differ by country and by region. In 2015, Hawaii became the first U.S. state to
ban plastic bags at store checkouts. While many plastic bag companies maintained their existing strategies in spite
of this decision, others saw Hawaii’s law as a trend that could extend to other states and countries. In anticipation of
this, they used it as a rationale to shift their strategies and begin making other types of reusable bags, both plastic
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