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In the last few decades, the connection between innovation and sustainable development has been brought to the surface due to the concerns of academics, scientists, and policymakers regarding environmental and social issues. Although numerous studies have discussed the significance of innovation in achieving corporate sustainable development (CSD), the relationship between these two concepts remains vague. Under this background, the aim of this study was to examine which types of innovation have a significant impact on CSD. In particular, four types of innovation were tested — incremental, radical, product, and process innovation — with the three dimensions of CSD: the social, environmental, and economic dimensions. The data collected from medium- and large-sized firms revealed that incremental, radical, and process innovation had a significant positive impact on CSD. These results have substantial theoretical and managerial implications, as they indicate what types of innovation managers should focus on in order to improve their sustainable business performance.

To implement a circular economy (CE), companies are pushed to innovate, respectively, their business models, from a micro-perspective, and their supply chains, from a meso-perspective. Despite the increasing research on both these perspectives, there is still a knowledge gap on how companies innovate business models and supply chains for circularity. In this study, we build on innovation management, circular business model (CBM), and circular supply chain (CSC) literatures and develop a theory-based framework where circularity leads to product/process/service innovation from a micro-perspective, and to possible innovation in companies’ supply chains (retaining existing chains/renewing them) from a meso-perspective. Through a multiple-case study of Finnish and Italian CE pioneer companies, we validate this framework, find evidence on interplay between CBM and CSC innovation, and identify innovation strategy variants. The framework contributes to innovation management, CBM, and CSC literature works, and encourages managers willing to adopt circularity to consider innovating simultaneously both their business models and supply chains.

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