How companies can use management controls to drive sustainable innovation
A decade-long study of industrial manufacturers reveals that the right internal controls—beliefs, boundaries, and performance metrics—help companies pursue sustainable innovations at scale. The findings suggest businesses pursuing environmental and social goals needn't choose between compliance and innovation, though the approach tends to yield incremental rather than breakthrough advances.
Originaltitel: The transformative potential of control systems for sustainable innovations in industrial contexts
Purpose Extending prior research on control and innovation, this study aims to explore the role of control in fostering sustainable innovations (as innovations that support social, environmental and economic performance) within industrial, inter-organisational contexts, examining how different controls are enacted. Design/methodology/approach A multiple case study design is used to examine how controls are enacted in two multinational, private-listed industrial B2B organisations, headquartered in Scandinavia. Drawing on both primary and secondary data, Simons (1995) levers of control (LOC) framework is used to analyse control enactment in the industrial context. Following the firms over 10 years, the study elaborates on the key types of controls and their interactions in supporting different forms of sustainable innovation. Findings The study extends the LOC framework to industrial, inter-organisational contexts. It shows how beliefs, boundary and diagnostic controls align behaviours for sustainable innovations, leading to incremental rather than radical sustainable innovations. It also shows that diagnostic controls play a dual role in supporting compliance (exploitation) and facilitating learning (exploration). Meanwhile, interactive controls remain limited in fostering change. The study also highlights the emerging role of social innovation within sustainability control research as important. Originality/value Extending the LOC framework to industrial, inter-organisational settings, this study offers new insights into how control systems shape sustainable innovation. It challenges traditional views on control by demonstrating that diagnostic controls not only enforce compliance but also foster learning, providing a more nuanced understanding of control dynamics for sustainability.