Stakeholder integration as a driver for sustainable innovation in organizations
Sanjay Sharma, Wilfrid Laurier University, Canada
Balancing the, often conflicting, objectives of social equity, ecological integrity and economic growth creates complexity in strategic decision-making because of the number and diversity of stakeholders impacted by the firm's operations. Therefore, sustainability solutions transcend organizational boundaries and effective understanding requires an integration of perspectives from a wide range of external and internal stakeholders. Integrating diverse stakeholder perspectives can influence organizational innovation at two levels: by altering organizational knowledge structure and by transforming managerial interpretations of sustainability issues from threats to be averted into opportunities to be sought.

Integrating external stakeholder knowledge helps a firm analyze ecological impact of their product life cycles and design products for the environment. Openness to external stakeholder influences leads to continuous learning and innovation within organizations since innovation requires the insights of multiple thought worlds or interpretive schemas of communities who think differently. Social intercourse helps managers evaluate complex and conflicting external information and the potential for learning is higher when the firm faces an ambiguous environment.

Reactive and proactive strategies of environmental responsiveness are a reflection of managerial interpretations of environmental issues as threats or opportunities. In situations of ambiguity where the meaning of sustainability and expected responses are being socially constructed, managers can be expected to take cues from the stakeholders that they interact with in their work and personal lives for guidance concerning correct behavior. Such psychologically weak or equivocal situations stimulate groups to engage in collective sense making and construct their own version of reality. Further, during times of crisis or extreme ambiguity, the negotiated order of information flows may change so that input from external stakeholders may become more important than the conventional information channels within the organization. This paper will examine processes via which stakeholder integration leads to the altering of knowledge structures and managerial interpretations of sustainability.