Sustainability issues have been gaining importance in the latest decades. Several authors have emphasized the positive results of including sustainable practices to management, such as sustainability-oriented innovation (Porter & Van der Linde, 1995; Epstein, 2008; Prahalad & Hart, 2002; Hart & Milstein, 2003; Hart, 2007; Nidomolu et al., 2009).

In this fashion, companies have been turned into key elements in this debate since they are holders of considerable economic, social and political power, and may influence the context in which they act (Hart, 2007). Furthermore, Hart and Milstein (2003) emphasize that a sustainable company is the one that contributes to sustainable development while it creates, simultaneously, economic, social and environmental benefits, what brings a new perspective of management and behaviour to companies, acting on a sustainable basis. Thus, sustainability means operating a business in a way that acknowledges the needs and interests of other parties (community groups […] and that does not fray but rather reinforces the network of relationships that ties them together” (Savitz & Weber, 2006; pp. x-xi).

One of the fundamental concepts derived from a sustainable perspective is that organizations should pursue not only the economic bottom line but also adding social and environmental dimensions to their performance (Elkington, 1997; Harris, Wise, Gallagher, & Goodwin, 2001; Savitz & Weber, 2006; Pava, 2007). Thus, the concept of “triple bottom line” (3BL) holds three distinct dimensions: (i) Economical – a sustainable economic system should be able to produce products and services in a continuous way, without causing tributary or financial trouble to the several participants in its value chain; (ii) Social – a social sustainable system reaches social fairness by creating income and opportunities, through social services, like health and education, and an equal treatment to all of its members; and (iii) Environmental – an environmentally sustainable system does not compromise the resources sources, renewable or not, making use of them in a parsimonious way, besides trying to keep the biodiversity, the stability of the atmosphere and other ecosystem functions (Harris et al., pp. xxix).

Although there has been some disagreement on the triple bottom line (TBL) concept (Norman & MacDonald, 2004; 2007), its use has increased since its first appearance (Elkington, 2001). In short, TBL would be “[…] a metaphor to remind us that corporate performance is multi-dimensional” (Pava, 2007, pp. 108), or in other words, “the triple bottom line captures the essence of sustainability by measuring the impact of an organization’s activities on the world” (Savitz & Weber, 2006, pp. xiii).

Thus, a sustainability-oriented company would be one that continues to develop by taking into consideration the economic, social and environmental dimensions of its processes and performance.

Therefore, it is possible to formulate the following:

Proposition 1: Sustainability-oriented innovation must also have environmental and social criteria, besides economic criteria.

One concept highly related to sustainability is the idea of stakeholders. According to its classical definition (Freeman, 1984, pp. 46), a stakeholder is “any group or individual who can affect or is affected by the achievement of the organization’s objectives”. Regardless of the adopted definition, one can notice a huge number of stakeholders for every specific organization. Nevertheless, as Freeman (1984) points out, there is a necessity for legitimacy of these stakeholders as regards the organization, and vice versa (Freeman, 1984; Mitchell, Agle & Wood, 1997), with the consequent split in legitimate and generic stakeholders, each one with different levels of influence, which should be stressed in a Sustainability-Oriented Portfolio Management Model.

Besides that, there will be a large set of variables that influence the relationships among stakeholders and firms, such as industry, size, location and others (Freeman, 1984). From the identification of the legitimate organizational stakeholders, it is possible to look at them as a part – and an object – of the strategy of the firm. Therefore, each stakeholder-organization relationship should be managed in a strategic approach (Freeman, 1984; Frooman, 1999; 2002; Buysse & Verbeke, 2003; Fernandez-Gago & Antonin, 2004).

Organizations should manage their impacts on stakeholders and deal with stakeholders influence on them (Freeman, 1984; Donaldson & Preston, 1995; Frooman, 1999; 2002; Carrol & Buchwoltz, 2000). Thus, a Sustainability-Oriented firm would be one that continuously obtains value creation processes that fulfill stakeholders’ expectations, through financial and competitive success, social legitimacy and efficient use of natural resources (Figge & Schaltegger, 2000, as cited in Perrini & Tencati, 2006). According to this, it is possible to conceive the following proposition:

Proposition 2: Sustainability-oriented innovation has multiple stakeholders-related criteria selection, besides the company’s own shareholders.

Since Schumpeter’s studies, in the 1940s, much has been discussed about the need for renovation in companies. After many studies done, it is known that companies can make new products based on the internal competencies already existent or through new competencies that should be embedded. This dichotomy idea leads to the definition of exploitation, the former case, and exploration, the latter (Danneels, 2002) following the terms created by March (1991).

One strategic renewal theory should acknowledge that to a firm maintain the adaptability to its changing environment, it is required the joint use of competencies: both the existent internally (exploitative), added to new competencies for the firm (explorative) (March, 1991; Danneels, 2008).

Thus, the firm’s ability to adapt to new contexts lies on the second order competencies, called explorative learning competencies, that allow a firm to identify, explore and embed new technological or market-related competencies, leading to a renovation on competences portfolio in a general way (March, 1991) or specific areas, such as marketing and Resource and Development (R&D) (Danneels, 2008). Therefore, the presence of a second order competence would mitigate the risk of historical dependencies, i.e., the stagnation in the past consolidated competencies, which could block the orientation to new products and markets, obstructing the renovation. (Danneels, 2002).

Therefore, it is crucial to search for new competencies through explorative learning, combining them with the exploitative competencies available internally, making it possible to one firm to become one ambidextrous organization – i.e., both exploitative and explorative. Danneels (2002) has achieved empirical support for that reasoning, through multiple case analyses of five Business-to-Business (B2B) companies belonging to a high-tech sector, varying the age, size and diversification degree. He has verified the relationship between companies’ product innovation dynamics and the missing competencies for each evolutionary development stage of the firm.

Danneels (2002) also has discussed the projects characteristics depending on the nature of the innovation, as shown in Figure 1.

Figure 1
Project characteristics depending on the nature of the innovation

adapted from Danneels (2002)

Thus, to balance between the exploration and exploitation, it would be interesting to maintain a set of organizational activities, each of which contributes to a particular type of corporate renewal in the exploration-exploitation continuum (Burgelman & Sayles, 1986; Keil, 2002).

According to Shenhar and Dvir (2007), decision-making process in projects comprises several activities, such as the proper project selection and its managers, resources allocation, planning, risk management, management style, organizational structure, processes and management tools. The authors sustain that projects should be treated adaptively, taken into consideration the specific characteristics of the projects. Thus, it would be fundamental to identify differences among projects, classify them and select the best approach to deal with them. For this purpose, they suggest four dimensions of classification for an individual project, by assessing its degree of innovativeness, complexity, technology newness and path, shown in Figure 2.

Figure 2
Nature of the innovation typology based on the competencies.

Adapted from Shenhar and Dvir (2007)

Another important feature for analyzing sustainability-orientation of a project is to identify the competencies needed to its development. Based on Mills, Platts, Bourne, & Richards, 2002) categorization of resources required for a firm, we have one typology framework, as shown in Figure 3.

Figure 3
Competences for innovation

Mills et al. (2002)

Therefore, considering by the sustainability focus that the new challenges in the future will be associated with the development of entirely new products and services embodying better environmental and social technologies, it is possible to formulate the proposition:

Proposition 3: Sustainability-oriented innovation projects demand the major presence of competencies if compared to traditional ones.

Thus, it would be possible to measure the orientation for sustainability for a given project related to these three propositions, according to the aims of this research, as presented in the next section.

3. METHODOLOGY

This exploratory study aims to evaluate the orientation towards sustainability for a company’s innovation processes based on green plastics, based on a case study. The research is grounded in three major aspects: the relationships among the triple bottom line approach; stakeholders’ influences and impacts; and the nature of innovation and needed competencies.

To achieve our objective, the case study was carried out in one large Brazilian chemical company, using the single case incorporated as defined by Yin (2001). The company, Braskem, is the biggest chemical company in Brazil and America, and one of the biggest biopolymer producers worldwide.

The chemical sector is known as an intensive user of technology and represents the third most important sector in Brazil regarding GDP. The chemical sector also was elected for this study because of its B2B characteristics, ensuring the simultaneous presence of suppliers and customers in the value chain and stakeholders. This sector can be considered up to date considering process and product technologies in Brazil, being the leader, Braskem, the first chemical in the world to introduce the green polyethylene derived from ethanol generated from renewable sources (sugar cane). From the literature, economies of scale and scope, cumulativeness and path dependence, as well as research and commercialization capabilities, are well-defined characteristics of the chemical firms (Arora and Gambardella, 1990).

We have gathered both secondary data, from company’s website and reports, and primary data, performing an interview with a structured questionnaire, with four parts: (1) the sustainability indicators used in the project’s monitoring; (2) the stakeholders’ influence in this project; (3) the general characteristics of the project and (4) which competencies are needed to perform the project. The respondent is the executive responsible for the project in analysis and is the Sustainability Director. For each one of the variables a score was given and an evaluation is done to identify the importance of the PE Green and its relative importance if compared to regular non-renewable projects. The rationale is shown in Figure 4.

Figure 4
Dimensions and Measures for the Sustainability-Oriented Innovation

created by the authors

Thus, it would be possible to measure the orientation for sustainability for a given project related to its orientation for sustainability, according to the aims of this research, as presented in the next section.

4. RESULTS AND DISCUSSION

4.1. The case study: Braskem Chemical

Braskem is today the largest producer of thermoplastic resin in the Americas, the largest worldwide producer of biopolymers with green polyethylene and the largest producer of polypropylene in the United States. Its industrial units are located in Brazil, the United States and Germany, countries where the company also maintains business offices and Technology & Innovation Centres. It also has commercial offices and headquarters in Argentina, Chile, Colombia, the Netherlands and Singapore (BRASKEM, 2013).

In 2011, Braskem had 6,477 members in Brazil and also 457 in the United States, working in 35 production units located in Brazil, the United States and Germany; it has 445 patents deposited in Brazil, the United States and Europe; and its net earnings were R$ 33.2 billion in 2011 (around USD 17 billion) (BRASKEM, 2011).

In the area of renewables, the company enlarged the partnerships with clients around Green Plastic. The unit which produces ethylene derived from ethanol in Triunfo (Rio Grande do Sul) has been in operation since 2010, producing raw material for the green polyethylene. The next step will be the production of green polypropylene (BRASKEM, 2011). In the United States, as well as in Brazil, Braskem has a centre for technology and innovation, fundamental to the ongoing support of Clients in the development of products and markets and to providing technical services. With Clients in more than 60 countries in five continents, Braskem supplies products that, once processed, are turned into various types of daily use items and applied in many different sectors. Presently, the Company has commercial offices in the United States, Argentina, Holland, Chile, Venezuela, Colombia and Singapore, the first Braskem office in Asia, inaugurated in 2011, with the objective of being closer to clients situated in Singapore, China, India, Indonesia, Korea and Japan (BRASKEM, 2011).

Braskem follows the strategies and policies defined by its holding – Odebrecht Group – and the values and principles of governance practiced are: integrity, transparency, equality, responsibility, continuity, and ethics (BRASKEM, 2013). Braskem’s vision statement for 2020 is “To be the world leader in sustainable chemicals, by innovating to better serve people” (BRASKEM, 2011). Its positioning is reinforced by its seven Macro-objectives, created according to RIO+20 Conference guidelines: effect greenhouse gases; energy efficiency; hydric efficiency; chemical safety; biopolymers, post consumption, and people (BRASKEM, 2011). For each one of these aspects were created policies and initiatives, such as the biopolymers, object of this study.

4.2. Braskem’s Green Plastics

The principal raw material for the petrochemical chain is naphtha derived from petroleum, a non-renewable resource. Though this is the first resource for the production of resin, Braskem has been investing in research, innovation and development of technologies for the use of renewable raw material, which also contributes to the mitigation of climatic changes. The Company inaugurated a green ethylene plant in 2010, in Triunfo (RS), starting to produce polyethylene from ethanol of sugar-cane and becoming the biggest global producer of biopolymers, in line with its Vision 2020. The entry into this segment of renewables put the Company in contact with a new chain of supplies that of agro-business, bringing challenges such as the use of the land and respect for the rights of the workers in cane plantations. This production chain is managed through control and auditing of the ethanol Suppliers. In 2010, Braskem approved the Code of Conduct for Ethanol suppliers that establishes sustainability criteria, including a commitment to environmental guidelines and respect for biodiversity and human and labour rights.

Today, about 85% of all the ethanol acquired for the green ethylene and ETBE plants are up to the code and, in 2011, an additional certification was adopted, that of Bonsucro, an institution with headquarters in London, England, whose certificate attests to sustainable practices in production, demanding the fulfillment of the laws, respect for human and labour rights, the preservation of biodiversity and the services of the ecosystem, besides productivity and continuous improvement of productive processes.

The year of 2011 was dedicated to training and consolidation of the project of ethylene and green polyethylene produced in Triunfo (RS) since September of 2010. As usual in the trial releasing of any new product in the market, all necessary adjustments were made in equipment and processes, for cost-cutting and better competitiveness in the business. In 2011, the Client base for the green line grew, especially in European countries, a destination for a significant part of this resin. Braskem’s Clients include, for example, Coca-Cola, Nestlé, Johnson & Johnson, Tetra Pak, Danone, Natura, Chanel, Toyota Tsusho, among other corporations.

In its portfolio of products made from renewable resources, Braskem offers a broad range of polyethylene grades to meet the growing demand for more sustainable products. These grades offer a versatile variety of applications, especially in for personal hygiene, cleaning, cosmetics, food and automotive industries. Since it has the same technical properties and processability as resin made from fossil fuels, processing the green plastic does not require any new investments in equipment or technical adjustments, which represents a critical advantage for the manufacturing industry. In October 2010, Braskem announced the construction of another production unit using renewable raw materials. This time, the plant will produce green propylene, which is also made from sugarcane ethanol and will have a minimum production capacity of 30,000 tons/year, with its start-up slated for late 2013. This will enable the production of green polypropylene, which, in its fossil fuel version, is the second most used thermoplastic resin in the world. The green PP will complement the company’s biopolymers portfolio and make possible new applications and partnerships.

The sustainable balance of green plastic shows that for each ton of green polyethylene produced, 2.5 tons of CO2 are captured and extracted. Another advantage is that green plastic is 100% recyclable using existing processes. Because green polyethylene is a high-value-added material, its recyclability is a crucial characteristic, since it allows the material to be reused innumerous times. In addition, because green PE is not biodegradable, the CO2 captured during the sugarcane cultivation process remains sequestered for the plastic's entire life cycle.

In 2011, Braskem’s green PE received the highest certification from the Belgian company Vinçotte, the leading certifier of products with the content of renewable origin. The analysis was based on samples from the HDPE (high density polyethylene) and LLDPE (linear low density polyethylene) families. All grades received four-star certifications, which is the highest quality rating conferred by Vinçotte. Until April 2014, Braskem’s green polyethylene will bear the seal ‘Ok Biobased’.

Some advantages make sugarcane a global reference among the world's renewable energy resources. Over 30 years of research and technological development in sugarcane cultivation have put Brazil in a vanguard position and given substantial competitive advantages to the country. Renowned worldwide for its sustainability and efficient production, Brazilian sugarcane has become a key protagonist in the consolidation of the so-called low-carbon economy. The fuel boasts the highest reduction in greenhouse gas emission, which is responsible for global warming and climate change. The emission of gases during its entire life cycle until the burning of the ethanol is up to 84% lower than that of gasoline. On the same comparison basis, emission of corn ethanol (United States) is only 30% lower than that of gasoline and 40% lower than that of beet ethanol (Europe).

In addition, sugarcane cultivation does not cause significant impacts on farming activities. Brazil uses only 1% of its arable land to produce ethanol, and of this land 80% is located in the Southeast region of Brazil. The crop can also be expanded over a vast area of degraded pastures without competing with land used for food cultivation.

Lastly, it is important to point out that sugarcane cultivation does not cause any impacts on the Amazon Rainforest. Not only does it have weather conditions that are inadequate for growing sugarcane, but the Amazon is also located 2,500 km away from the main sugarcane growing regions. Moreover, national and regional laws govern the cultivation and expansion of areas dedicated to sugarcane cultivation to preserve the existing ecosystem.

The energy balance of sugarcane shows its superiority. Data from the World Watch Institute (2006) show that sugarcane ethanol generates 9.3 units of renewable energy for each unit of fossil energy used in its production. In the case of corn ethanol (United States), the renewable energy generated by the ethanol produced is only 1.4, while for beet ethanol (Europe) this figure is of 2.0 units. This advantage of sugarcane is largely because the Brazilian plants are self-sufficient regarding energy, since they use the co-products from the actual process to generate bioenergy. Also, the productivity of sugarcane is higher than that of other renewable resources. For comparison, sugarcane (Brazil) yields 6,500 ethanol litres/hectare; corn, (United States) 4,200 litres/hectare; and beets (Europe), 5,500 litres/hectare.

The I'm Green™ seal was created to identify products that contain Braskem’s green plastic in their composition. The use of the seal is subject to the compliance with certain rules that consider the transparency of communication and compliance with international green seal rules. The main objective of these criteria is to create a strong identification that conveys credibility to final consumers while avoiding as much as possible any association of products using Braskem’s green plastic with greenwashing practices.

4.3. Results and analysis

In this session, we present the data gathered from the interview and the structured questionnaire, performed with the executive responsible for Braskem´s Directory of Sustainability. The analysis comprises the following facets: the sustainability indicators used to monitor this project; stakeholders are taken into account in this project; the characteristics of PE Green project and the competencies needed for its accomplishment. For each one of the variables a score is given and an evaluation is done.

4.3.1 PE Green’s GRI indicators Economic indicators

Table 1 shows the results for the economic indicators of PE Green project. Four of the seven GRI essential economic indicators listed are used (57%). The highpoint is EC1, emphasizing the economic importance of this project. Several factors contribute to this perception. This project is aligned with the new vision of the enterprise, enphasizing green products. It has lower relative costs of raw materials compared to mineral sources and is promising to gain market share in the new social-environmental paradigm. The incomes came from abroad are expected to be higher.

Table 1
Economic indicators – PE Green Project

*Score 1 – very low to 5 – very high; **Score 1 – much lower to 5 – much higher Environmental Indicators

Table 2
shows the results for the environmental indicators of PE Green project. Table 2: Environmental indicators – PE Green Project

*Score 1 – very low to 5 – very high; **Score 1 – much lower to 5 – much higher We notice that 12 of the 17 GRI essential environmental indicators listed are used (70.6%). The emphasis is on EN8, EN16, EN17 and EN21, what reinforces the importance of water and greenhouse gases – two of the Braskem’s macro-objectives. It is interesting to notice that the location (EN11) is not as important as the others are, possibly because the company had already had its plant in operation and indirect energy consumption is also lower, possibly due to the new technology in use.

SOCIAL INDICATORS

Table 3 shows the results for the environmental indicators of PE Green project, and one can notice that 9 of the 25 GRI essential social indicators listed are used (36%). Despite some high scores (LA7, HR6, HR7, SO1), the importance of the PE Green project is relatively the same if compared to other projects. It gives the impression that the social policies are the same throughout the company and they do not vary accordingly to the project nature.

Table 3
Social indicators – PE Green Project

*Score 1 – very low to 5 – very high; **Score 1 – much lower to 5 – much higher

4.3.2 PE Green’s Stakeholders

Table 4 shows the results for the stakeholders taken into consideration for PE Green project, and one can notice that 10 of the 14 stakeholders indicators listed are used (70.6%). The primary concern is to the international consumers and clients – what is entirely coherent with the company’s vision – and shareholders, highlighting the economic and financial impact of this project for its investors. If compared to other projects, the emphasis is on the international consumers and clients, and local suppliers, what gives an idea of the importance of the supply chain for the success of this new product. Other stakeholders such as employees, international signatories, Non-Governmental Organizations (NGOs) and local public agencies were not given a score, according to the respondent.

Table 4
Stakeholders – PE Green Project

*Score 1 – very low to 5 – very high; **Score 1 – much lower to 5 – much higher

4.3.3 PE Green’s characteristics

Based on the following terms related to the Shenhar and Dvir (2007) model, we have the results for the characteristics of PE Green project in Table 5.

Table 5
Characteristics for the Sustainability-Oriented Innovation

*Score 1 – very low to 5 – very high; **Score 1 – much lower to 5 – much higher Thus, we have:

- Innovativeness degree: it is considered high, since its novelty in a whole world basis, being classified as “new to the world”. Compared to the projects based on nonrenewable sources, the innovativeness degree is considered higher.

- Complexity degree: it is considered low, since the company was used to build the polymerization facilities. One time the process of the conversion from ethanol to ethylene was developed in laboratories, the upscale to industrial scale was not considered complex and even lower than the projects with nonrenewable sources because the operation process was simplified.

- Technology newness degree: in the same direction, it was considered low, because the technology to convert ethanol to ethylene was known since the 70’s. The significant advance came from the development of one process to achieve higher levels of efficiency in this process, as well as the development of the new sugarcane supply chain.

- Path: the PE green project building showed similar duration from the planning phase to the facility deliver, compared to traditional projects.

4.3.4 PE Green’s competences

By using the Mills et al. (2002) typology on competencies, the respondent classified the competencies needed in PE green project regarding presence and importance both for traditional projects and nonrenewable sources. The results are shown in Table 6.

Table 6
Competencies needed to the project

*Score 1 – very low to 5 – very high; **Score 1 – much lower to 5 – much higher If compared to traditional projects on PE obtained from non-renewable sources, it is possible to identify the most distinctive competencies needed to perform the PE green project, as follows:

- Patents (Intellectual property): after developing the process, the company has protected the intellectual property on a worldwide basis, being the PE green patent the first one to be deposited in the world.

- Technical knowledge (know-how for carrying out the project): the lab upscale development, the multidisciplinary experts involved in the project and partnerships with Universities and ethanol institutes were considered unique aspects for the positive achievements.

- Prior experience in this kind of project: the path dependencies on producing plastics and doing retrofitting of industrial plants, aided the company to continuously deal with the obstacles encountered along with the development stages

- Culture and organizational values openness to the project requests: in the view of the interviewed, only the openness of culture to absorb one change of raw material source, in this magnitude, enabled the project success. Not only the culture for a change was present, but also it was formalized and expressed in the company’s vision, mission and main values.

5. CONCLUSIONS

As academic implications, these preliminary results indicate that several aspects of the sustainability-orientation are taken into account in the analyzed project and they occur in different degrees and according to the company´s strategy. For the three propositions, we have the following: P1: Sustainability-oriented innovation must have also environmental and social criteria, besides economic criteria: the 3BL approach is taken into account, but with a predominance of environmental indicators, especially if we compare the PE Green project to others; P2: Sustainability-oriented innovation has multiple stakeholders-related criteria selection, besides own company shareholders: the highpoints are the shareholders and also international market and local suppliers, due to the company´s characteristics (open market), strategy (internationalization) and resources dependency (value chain); and P3: Sustainability-oriented innovation projects demand major presence of competencies if compared to traditional ones: the most important resource is technical knowledge, given the innovative drive of this project. Thus, we have considered the suitability of these propositions, especially if we consider the multifaceted way to determine the sustainability-orientation for innovation.

As practical implications, it is possible to point out the need for effective assessments for effectively evaluating innovation management. The complexity of a sustainable approach and its effective operationalization can also lead to major difficulties in assessing orientation for sustainability in the innovative projects. The use of Global Reporting Initiative (GRI) indicators can be an easier way to do so, but specific and strategic aspects for each company may not be all covered by standardized guidelines. Besides that, we could emphasize the importance of both stakeholders’ strategic management and strategic project management as critical for company performance.

As limitations for this research, it is appropriate to mention that the primary data comes from the perception of only one respondent and it is a cross-sectional data analysis. We suggest that the same data be gathered from different sources within one company to better understand the different visions of the project in analysis.

As suggestions for future studies, it would also be important to have empirical data from other leading companies that already have sustainability-oriented projects, products and services, to introduce control variables for comparison among different sectors and size or even to identify the best practices in the field. Another possibility, in the same sense, is to compare distinct innovation projects among one firm’s portfolio, in one extended database.