Sustainable innovation strategies and firm performance: evidence from the Italian food industry Open Access

Firms are under constant pressure to address sustainability challenges while maintaining optimal performance for shareholders. The relationship between sustainable innovation and firm competitiveness has gained increasing prominence in academic discourse (Afeltra et al., 2023; Chu et al., 2018), with sustainability now occupying a central position in corporate social responsibility debates (Porter and Kramer, 2006). For that purpose, on one side the Strategic management provides a structured approach to integrating sustainability into corporate strategies, policies, resource allocation and in the daily life of the company, on the other side managers have to explore ways to integrate sustainability into strategies that leverage these internal assets (Negrão et al., 2024).

In the food industry, sustainability issues are particularly pressing, as firms must manage pollutant emissions, optimize resource use, and reduce food waste (El Bilali, 2018; Jeong and Shin, 2020; Román et al., 2021). Strategic management contributes to a structured approach to integrating sustainability into corporate policies, decision-making, and resource allocation. According to the research of Sedovs et al. (2025) sustainability has been increasingly integrated into strategic managemnt practices paritularly since adopting the SDGs in 2015.

The food industry covers a pivotal role within the current debate about sustainable development (Venturelli et al., 2022) and for agro-food business firms, the sustainability challenge is both complex and pressing. A key barrier to implementing sustainable strategies is maintaining profitability, as pursuing sustainability goals often leads to higher fixed costs (Cai and Li, 2018; Palmer et al., 1995). Product and process innovations may also increase variable operating costs, threatening return on investment (Antonioli et al., 2016; García-Sánchez et al., 2020).

In addition, consumers are changing their eating habits and patterns, increasingly adopting specialized diets that require the elimination of certain ingredients (Cillo et al., 2019). While adapting product characteristics to meet these emerging demands may attract new customers, it also carries the risk of alienating existing ones, potentially harming in sales and market share (Walley and Whitehead, 1994). Communication strategies around sustainability can be critical to maintaining sales and growth (Cortez and Cudia, 2010; Forsman, 2013).

Thus, achieving profitable growth while strengthening a firm's sustainability profile seems challenging (Ghisetti and Rennings, 2014). However, this research aims to show that, under certain conditions, sustainable innovation strategies can enable firms to achieve better profitable growth. The study examines how sustainability strategies are defined, how they are communicated externally, and what organizational changes they induce, particularly in production processes.

The remainder of the paper is structured as follows: the next section explores the relationship between sustainability and innovation, followed by the hypotheses to be tested. The third section presents the empirical study and data analysis. The fourth section discusses the results, the fifth section is dedicated to findings and managerial implications, in the conclusions we discuss limitations and future research directions.

The concept of sustainability encompasses multiple dimensions: social, economic, and environmental (Dyllick and Hockerts, 2002; Seuring and Müller, 2008). Initially, sustainability was approached mainly from an environmental perspective, with a dominant focus on practices aimed at reducing the ecological impact of business operations (Klewitz and Hansen, 2014). Some studies explored this topic through the lens of environmentally friendly production processes and product redesign to minimize resource consumption and waste generation (Chiou et al., 2011). For example, this includes redesigning product packaging by introducing biodegradable raw materials with the goal of achieving more sustainable packaging that contributes to attract certain market segments and is favorable perceived by the distribution system (Bogers et al., 2020).

More recent contributions have shifted attention to the circular economy (de Sousa Jabbour et al., 2019; Hussain and Malik, 2020), which emphasizes product innovation throughout the life cycle, including the recovery and reuse phases (Alkhuzaim et al., 2021). Additionally, other recent studies have theorized a direct relationship between innovation, sustainability, and firm performance (Garousi Mokhtarzadedeh et al., 2022; Mokhtarzadeh et al., 2020), focusing on both gowth and profitability. According to various scholars (Adams et al., 2016; Arfi et al., 2018), a broader approach to sustainability is needed, one that integrates the environmental, social, and economic dimensions. Hermundsdottir and Aspelund (2021) highlight that sustainability innovations are “innovations wherein all sustainability dimensions, including environmental, social, and economic, are considered during the whole innovation process”.

In this paper, we adopt a focused perspective on sustainability, emphasizing its environmental dimension. Specifically, we define sustainability as a set of practices aimed at reducing emissions and promoting more efficient use of natural resources. These environmental practices are particularly critical in the food industry (Gazzola et al., 2024), in particular, considering the critical importance, for food products, of raw material origin and quality, we include sustainability practices related to supplier relationships, particularly the selection of suppliers based on their sustainability credentials, a necessary step for firms committed to sourcing environmentally responsible raw materials. While social aspects are not the primary focus of our analysis, it is clear that environmentally driven decisions can have significant positive impacts on societal well-being.

The development of our analytical model begins with the definition of a sustainable firm. A firm is considered sustainable if it adopts managerial practices that contribute to the reduction of pollutant emissions and the efficient use of raw materials, especially those that are aligned with international frameworks such as the sustainable development goals (SDGs) (Xia et al., 2018). Following Whittington (2006), we define management practices as the actions, behaviors, routines, and strategies that managers use to coordinate resources, lead teams, make decisions, and achieve organizational goals.

In many cases, firms adopt sustainable practices in response to market trends, shaped or driven by regulatory changes, such as new environmental regulations or restrictions on certain substances, and thus align their strategic decisions with external pressures (Díaz-García et al., 2015). According to Zameer et al. (2024) firms has to innovate and shape their positive image, and sustainability-oriented corporate strategies drives innovation and firm image among external stakeholders, contributing to firm's performance. Rather than proactively pursuing sustainability, firms often adapt to environmental expectations to remain operationally viable while minimizing the costs associated with transitioning (Doran and Ryan, 2012; Horbach et al., 2012). Sustainability is often not used as a strategic differentiator to gain competitive advantage (Kolk and Pinkse, 2005). Typically, firms allocate a fixed proportion of their revenues to sustainability efforts. As firm size increases, and with it the absolute value of these investments, firms tend to perceive themselves as more effectively sustainable. In contrast, smaller firms often face greater challenges in adopting sustainable practices due to limited resources (Bergmann and Posch, 2018).

In many firms, sustainability strategies emerge as a collection of uncoordinated initiatives that evolve over time into more structured approaches, what Mintzberg and Waters (1985) describe as emergent strategies. These initiatives are often systematized at a later stage and eventually integrated into the overall strategic framework and aligned with corporate strategy (Neugebauer et al., 2016). Typically, the formalization of sustainability strategies occurs retrospectively, often materializing in sustainability reports. These complex documents, mostly produced by medium and large firms, detail the actions taken to improve sustainability (Corazza et al., 2017; Whitehead, 2017). The introduction of enhanced reporting regulations has significantly advanced the dissemination of non-financial information among large business groups (Mion and Loza Adaui, 2019). However, focusing solely on sustainability reports risks overlooking the efforts of many small and medium-sized enterprises (SMEs), whose sustainability practices may not be formally documented (Borga et al., 2009; Nigri and Del Baldo, 2018). The act of formalizing sustainability strategies reflects a firm's capacity for strategic planning and its ability to integrate emerging initiatives. It also signals a proactive stance in response to environmental pressures related to sustainability (Engert and Baumgartner, 2016). Organizations that formalize their sustainability strategies not only respond to external demands, but also demonstrate an intentional commitment to implementing sustainable innovations (Koomson, 2025; Ortiz-Avram et al., 2024). These organizations go beyond broad strategic intentions and take structured, planned actions to achieve sustainability goals. Therefore, to effectively assess changes in a firm's sustainability orientation, it is essential to examine the actions taken as part of a formalized strategy. We therefore posit:

Communication plays a fundamental role in the successful implementation of sustainability strategies. In recent years, sustainability communication has evolved significantly, particularly with the rise of sustainability reports and, more recently, integrated reporting. These tools aim to disclose a firm's sustainability policies, primarily to institutional stakeholders (Lam et al., 2005; Seuring and Gold, 2013) and investors interested in ethical investment opportunities (Cacciolatti et al., 2020).

Effective communication policies focused on sustainability can have a positive impact on sales growth (Bresciani et al., 2016). Firms often target consumer segments that are particularly sensitive to environmental and ethical issues, highlighting best practices in areas such as production processes and packaging. In some cases, sustainability communication is also used strategically to gain greater visibility in distribution channels (e.g., large retail chains) that are increasingly interested in offering new or reformulated products with enhanced sustainability features (Lin et al., 2013).

Investments in sustainability communication typically require a medium-to long-term horizon, as continuous refinement is required to effectively reach and engage consumers (Pieroni et al., 2019; Thakur, 2019). This process fosters customer engagement, encouraging consumers to not only adopt the firm's value proposition, but also to become loyal customers and brand ambassadors who share positive word-of-mouth feedback (Yen et al., 2020). While such investments may impact short-to medium-term profitability, they can yield substantial long-term benefits, particularly in terms of sales growth (Ruggeri and Samoggia, 2018; Tölkes, 2018). Moreover, sustainability communication supports differentiation strategies by increasing customers' willingness to pay a premium for products with perceived sustainable attributes (Gazzola et al., 2022), furthermore higher margin products are pushed by distributors, like supermarkets and specialized retailers. Therefore, we propose:

Firms are increasingly integrating sustainability considerations into their innovation policies, particularly in the manufacturing sector. Environmental practices, such as reducing emissions and minimizing production-related waste, are becoming key drivers of innovation, especially in the industrial and food production contexts. These sustainability-driven changes often require the redefinition of business processes and, in some cases, product architecture. However, the impact on growth and profitability is not always immediate or uniformly positive. So-called “clean” firms – those that effectively implement sustainable practices – tend to enjoy more favorable access to both human and financial resources (Flammer, 2013). In addition, their stronger relationships with public stakeholders contribute positively to their long-term performance (Ferrero-Ferrero et al., 2017).

In line with the growing interest in the circular economy, sustainability-focused product redesign has gained traction, often correlating with improved performance in certain sectors. Modular product design, which aims to minimize waste, is increasingly seen as a standard form of sustainable innovation.

Packaging redesign is another important area of sustainable innovation, particularly in the food industry (Meherishi et al., 2019). For example, efforts to improve the sustainability of packaging may lead to broader product reformulations, such as extending shelf life, which in turn require innovation in both products and processes. However, product innovation alone is not enough to change a firm's overall sustainability profile. Truly sustainable product redesign requires corresponding changes in production processes and throughout the value chain. This transformation may involve revising manufacturing stages, replacing equipment, adjusting production schedules, or modifying logistics systems, all with the aim of reducing environmental impacts (Demirel and Danisman, 2019; Evangelista et al., 2018).

Process innovations are particularly relevant because of their direct impact on a firm's resource configuration. Such changes often require a rebalancing of the firm's resource portfolio (Pieroni et al., 2019), making them central to broader business model renewal efforts (Evans et al., 2017; França et al., 2017).

Focusing solely on product innovation risks overlooking the structural changes required for a true transition to sustainability. For example, the introduction of sustainable packaging does not in itself indicate a changed sustainability profile. A firm that is truly committed to sustainability must introduce radical process changes such as reducing emissions, switching to alternative raw materials, and reducing energy consumption and transport-related pollution (Carrillo-Hermosilla et al., 2010). These changes represent strategic transformations that fundamentally alter the firm's resource base in ways that are typically difficult to reverse (Romme et al., 2010).

In this context, the analysis of process innovations provides a more comprehensive understanding of how sustainability affects firm performance. Therefore:

The research was carried out within the framework of the Food Industry Monitor, an observatory on the performance of Italian food firms set up by the University of Gastronomic Sciences (UNISG) in Pollenzo, Italy (Garzia, 2022). The study focuses on a sample of 444 firms selected from more than 850 firms monitored by the Observatory which represent about 75% of all firms operating in the Italian food sector.

For statistical robustness and sectoral representativeness, 444 firms were selected based on two primary criteria: 1) full data availability for the 2015–2019 period, ensuring data completeness; and 2) revenues of at least 1 million euros in 2015, enabling the comparison of firms with a sufficient level of management capabilities. The selected population covers 15 representative sectors of the Italian food industry and it's well distributed both in terms of sectors and firm size, measured by number of employees. Out of the selected sample, 150 firms completed the survey ^[1], leading to a response rate of 33.78%. We collected data on sustainable innovation through CATI (Computer-Assisted Telephone Interviewing). The questionnaires were administered during scheduled appointments with qualified respondents from each firm that agreed to participate. We defined “qualified respondents” as representatives of the controlling shareholders and members of the top management team. For analytical clarity, these sectors have been grouped into five meta-sectors (see Table 1).

In the sample, 15% of firms qualify as large (more than 250 employees), while the remainder are evenly split among very small, small, and medium-sized. All the firms surveyed operate in sectors that involve the industrial transformation of raw materials and semi-finished products – activities that typically require significant energy inputs and generate waste – and are thus directly exposed to sustainability challenges in their innovation processes.

A particularly important finding relates to investment behavior. The data reveal a structural shift underway in the food sector: 93% of firms reported having made sustainability-related investments in the past five years, and 80% plan to make further investments in the next three years. On average, firms have increased their sustainability investments by 38.8% over the past five years.

While 81% of firms surveyed consider themselves sustainable, only 56% have implemented a formalized sustainability strategy. This includes planned actions to redesign products and processes for sustainability, as well as related organizational changes. In addition, 78% of firms currently offer one or more products that can be considered sustainable. Sustainability efforts are not limited to manufacturing: 54% of firms have redesigned packaging with sustainability in mind, and 44% select suppliers based on sustainability criteria. However, the shift to sustainability is not without cost: 63% of firms report increased business costs because of reconfiguring value chain activities to align with sustainability goals (see Table 2).

The data indicate that while a general understanding and acceptance of sustainability is widespread – 81% of firms self-assess as sustainable (scoring at least 3 on a 4-point scale) – this figure falls to below 60% when firms are asked about the implementation of formalized sustainability strategies. This suggests a significant gap between perceived and actual sustainability. Notably, firm size correlates with this gap: 20 out of 21 large firms report having adopted formalized sustainability measures. However, this trend persists even after controlling for firm size, as will be explored in the following analysis.

One in three firms report having an external communications strategy explicitly focused on sustainability, while another 43% say their communications are at least partially sustainability-focused. Furthermore, 75% of firms identify as innovative, a figure that aligns with the 61% of firms engaging in product innovation and 72.5% involved in process innovation.

To assess the relationship between sustainable innovation and business performance, we analyzed firms' compound annual growth rate (CAGR) in revenue over the 2015–2019 period.

The CAGR (Compound Annual Growth Rate) measures the annual growth rate of a given variable—revenues, in this case—over a period of three or more years. The CAGR is calculated using the following formula:

where:

1. $R0$ represents the revenue value for the earliest year considered, in this case 2015;

2. $Rt$ represents the revenue value for the most recent year considered, in this case 2019;

3. $t$ indicates the number of periods considered, in this case 4.

The CAGR formula is particularly useful in comparative analyses of firm performance, as it synthesizes long-term trends into a single, easily interpretable indicator.

We chose CAGR as the primary performance measure for two main reasons: (1) the explanatory variables in our study are cross-sectional, and (2) they inherently reflect multi-period effects. Thus, using a synthetic indicator such as CAGR over a five-year period allows us to capture the medium-term effects of the explanatory variables while remaining methodologically consistent with the cross-sectional nature of the dataset. The paper uses data on economic and financial performance up to 2019 as its reference period, for two main reasons. The first concerns the practical feasibility of obtaining complete financial statements for all companies in the sample. These records are often updated with a delay of up to two years. Therefore, using 2019 as the final year of analysis allows for the inclusion of the entire sample. The second reason relates to the exceptional nature of the Italian food sector's market performance following the COVID-19 pandemic. Specifically, the food industry experienced abnormal growth: +10% in 2020 and + 16% in 2021; figures that are significantly out of line with trends observed before 2019 and after 2022.

As noted above, self-perception of sustainability does not necessarily correspond to actual implementation of sustainability practices. We argue that the adoption of sustainability-oriented practices can only positively influence firm performance if it is supported by specific managerial capabilities (Helfat and Martin, 2015; Inigo et al., 2017). These capabilities represent a critical source of sustainable competitive advantage (Amui et al., 2017). In particular, we focus on a subset we call sustainability-oriented managerial capabilities (SOMC), which refer to the ability of top management to steer the firm toward sustainable business models by implementing relevant managerial practices.

This theory is integrated with the sustainability-oriented dynamic capability (SODC) (Yi and Demirel, 2023). The study analyzes the deeper institutional ability to innovate, adapt, and compete in a networked world of constant change and of complex business “ecosystems.” To reach this goal the theory of dynamic capabilities (Teece, 2007, 2016; Teece et al., 1997) has been considered. We integrated SOMC with SODC to develop a theoretical framework to explain how dynamic capabilities can contribute to effective sustainability implementation enabling companies to internalize economic, environmental and social challenges in their strategy. In this way company can face the uncertainty and transform it in opportunity.

We identified three key management practices that serve as proxies for these capabilities: formalized sustainability strategy (FS), sustainability-oriented communication (SOC), and sustainability-oriented process innovation (SOPI) in a dynamic environment.

The three key management practices considered in this study were measured using dichotomous variables derived from questionnaires administered to the selected sample firms. While originally collected on a 4-point-Likert scale, these variables were subsequently transformed into dichotomous variables for analytical purposes (DeCoster et al., 2009): firms responding with an intensity of 1 or 2 were assigned a 0, while those responding with 3 or 4 were assigned a 1 in the corresponding dichotomous variable. The variable formalized sustainability strategy (FS) aims to verify whether the company has formalized strategies oriented toward sustainability, with the corresponding dichotomous variable assuming a value of 1 if present, and 0 otherwise. Sustainability-Oriented Communication (SOC) investigates the presence of a structured communication strategy aimed at promoting the company's sustainable practices. A value of 1 is assigned if such strategy is in place, and 0 if it is not. Sustainability-Oriented Process Innovation (SOPI) refers to companies that introduced process innovations oriented toward sustainability. A value of 1 is assigned to firms that implemented the practice, and 0 to those that did not. Based on the presence or absence of these three proxies, we categorized firms according to a gradient of sustainability-oriented managerial capabilities and their dynamic capability to react to the changes. We then constructed four dummy variables, each representing whether a firm exhibits 0, 1, 2, or all 3 of the SOMC dimensions. These variables serve to quantify and classify the firm's capability level. Table 3 shows the correlation between these capability categories and firm performance, as measured by CAGR from 2015 to 2019.

The correlation analysis indicates that only the simultaneous presence of all three SOMCs enables firms to implement a sustainability-oriented business model that significantly outperforms models not incorporating sustainability. This finding underscores that the key to superior performance lies in developing an integrated and coherent set of SOMCs.

Firms that are “in transition” (i.e., those that possess only one or two of the three capabilities) fail to achieve a positive performance differential. This suggests a complementary and reinforcing effect among the three SOMC dimensions: while having two capabilities results in better performance than having just one, it still does not yield a positive impact on growth. SMEs can face challenges in implementing a full range of sustainability-oriented practices. For example, some firms, attracted by positive market responses, may be tempted to focus primarily on sustainability-related communication practices. However, these efforts are often not well supported by actual process and product innovations, and they may lack a clearly formalized sustainability strategy that integrates various aspects of company management. Without such strategic alignment and internal support, these communication efforts risk being perceived as superficial or inconsistent with the firm's operations. In certain cases, even when SMEs have accurately formalized and planned their sustainability strategies, they may struggle to implement sustainability-oriented process innovations due to a lack of financial and organizational resources. These challenges are often compounded by the need to acquire specific know-how or technical expertise that is not readily available within the firm.

Only when all three capabilities (FS, SOC, and SOPI) are fully developed and integrated do firms experience a tangible improvement in performance. Firms with an organic sustainability strategy outperform all others, while firms with an underdeveloped strategy – lacking one or more capabilities – face structural inefficiencies that impede growth.

To further examine this relationship, our SOMC gradient is disaggregated according to all possible combinations of the three proxies. Table 4 presents a comparative analysis of firms based on the number and combination of SOMCs adopted, using firms with none of the capabilities as a baseline.

The analysis again confirms that an incomplete set of capabilities is associated with a negative impact on performance. However, this negative effect diminishes as the number of capabilities increases ^[2]. Notably, firms that possess all three SOMCs demonstrate a significantly positive performance effect, with an average CAGR increase of 3.3% over the observation period compared to firms without any of the capabilities.

The discrepancy between the number of firms that self-identify as sustainable and those that have actually implemented formal sustainability measures underscores the limitations of relying on self-assessment for a multidimensional and complex construct such as sustainability. In addition, high performing firms are more likely to invest in sustainability and innovation, owing to their greater availability of resources. This raises the risk of endogeneity, where observed performance may not be directly attributable to sustainability strategies, but rather to resource abundance and propensity to innovate. To address this methodological concern, we employ an instrumental variable (IV) approach that accounts for the potential endogeneity associated with strategic sustainability investments.

Moreover, sectoral differences play a significant role, as firms in different industries face varying degrees of exposure to sustainability-related pressures and innovation demands. To control for this heterogeneity, we adopted a dual strategy: (1) clustering standard errors at the industry level in standard IV regressions, and (2) running fixed effects IV regressions that include industry fixed effects.

In the following section, we present and discuss the empirical results related to our three main hypotheses.

First, we tested H1 for a direct relationship between CAGR and several variables, including self-assessed sustainability, changes in product ingredients for sustainability, changes in product packaging for sustainability, selection of suppliers based on sustainability criteria, selection of vendors based on sustainability criteria, self-assessed investments over the past 5 years, and change in sustainability-related investments over the past 5 years. We controlled for firm size (measured by the number of employees) in each analysis. These analyses were conducted using both standard linear regression (with clustered standard errors at the industry level) and fixed effects regression with industry fixed effects. None of these analyses were found to be significant.

Table 5 shows the results of our IV regression, where we used formalized sustainability and the change in sustainability-related investments over the past 5 years as instruments for self-rated sustainability. Different specifications are reported in the different columns of the table.

From columns 3 and 5, we conclude that the variation in sustainability-related investments over the past five years is not a reliable instrument for formalized sustainability due to the lack of significance in the first stage and the failed over-identification test. Despite the significance of the first stage and the strong overall significance of the coefficient estimate, the clustering of standard errors at the sector level led to a failed endogeneity test. However, the significance of the coefficient estimate, and the overall significance of the fixed-effects IV regression reassure us about the robustness of our model, even when accounting for intra-sector correlation.

We believe that external communication of sustainability practices could serve as an additional proxy for implemented sustainability practices, as it requires strategic decision-making and dedicated resource investment. To test H2, we conducted further analyses, the results of which are presented in Table 6.

In the first two regressions, we confirmed the validity of the additional instrument and ruled out the possibility of over-identification, even when controlling for firm size (columns 1 and 2). Our results remain robust to clustered standard errors and sector fixed effects with robust standard errors. The implied positive effect of formalized and externally communicated sustainability is about 3%.

Finally, our database allows us to test the relative importance of product and process innovation in relation to sustainability. As suggested by previous research (Demirel and Danisman, 2019; Evans et al., 2017; França et al., 2017), sustainable innovation is more strongly associated with process innovation than with product innovation. The results shown in Table 7 support H3.

The specifications in columns 1–3 suggest that sustainability is indeed related to innovation. However, this relationship tends to break down when product innovation is taken into account. In contrast, column 4 shows a strong and positive relationship between sustainability and process innovation, which remains robust to controlling for firm size. This result is consistent when using clustered standard errors and when introducing industry fixed effects with robust standard errors.

Finally, we tested the joint relationship between sustainability and the proxies analyzed, including formalized sustainability, external communication of sustainability practices, and process innovation. The results of our IV regressions are reported in Table 8.

The first IV specification shows that our three instruments serve as reliable proxies for sustainability, and this result is robust both to clustered standard errors and to the inclusion of industry fixed effects with robust standard errors.

From these results, we can confidently conclude that firms that proactively invest in sustainability also demonstrate a proactive approach to innovation, particularly in the area of process innovation. This proactive stance is reflected in their growth performance over the medium term (5 years).

The data analysis provides valuable insights into the significant link between sustainability decisions and business performance. The findings underscore that firms with a formalized sustainability strategy, increased sustainability investments, and effective communication of their sustainability practices tend to have higher growth performance.

Particularly important are the findings on the processes for formalizing the sustainability strategy. A formalized sustainability strategy signals that a firm's efforts to improve its sustainability profile are clearly planned, and that management is accountable for their implementation. Formalizing sustainability strategies involves strategic planning activities focused on sustainability-oriented actions that can impact production processes, procurement and logistics. Typically, strategic planning also entails decisions related to product innovation. The formalization process affects not only planning activities but, more importantly, requires significant efforts in developing new key performance indicators (KPIs) to monitor the evolution of sustainability-oriented strategies. This process ensures that sustainability actions are not vague or abstract, but part of a structured plan that the firm is actively pursuing. In addition, formalization introduces an important element of measurement, allowing the firm to assess the effectiveness of sustainability initiatives and monitor progress towards sustainability goals over time.

The analysis also shows that the market rewards sustainability. Firms that make and communicate sustainability choices can sell products at higher prices, leading to better growth performance in terms of sales. Sustainability-oriented external communication can be pursued at the firm level —for example, by promoting the publication and dissemination of sustainability reports — as well as at the product level, through communication about sustainable procurement policies, rather than focusing on sustainable packaging and/or production practices.

Given the ongoing processes of imitation and diffusion of sustainable innovations, this differentiation advantage is likely to diminish as best practices become more widespread and adopted by major market players. Although this is a short-term advantage, it suggests a first-mover advantage in positioning, as well as a learning curve advantage and a reduction in additional costs associated with sustainability-driven process changes. In the medium term, it is plausible that there will be a segmentation of sustainability strategies, with firms seeking unique “sustainable positioning” to achieve growth and profitability above the industry average. Even if sustainability-oriented strategies will not to a distinctive source of long-term competitive advantage, it is important to recognize that the diffusion of sustainable practices among food firms and the introduction of more sustainable products, produced and distributed through environmentally conscious processes, can have a positive impact. These efforts enhance customers' perceptions of quality and contribute to meaningful social and environmental outcomes. Therefore, while sustainability may not be a long-term source of competitive advantage, it plays a critical role in generating broader value for both society and the environment.

Well-planned and implemented sustainability decisions are positively related to business performance. Sustainability strategies often involve process innovations that affect various activities in the value chain, resulting in better use of production resources and lower emissions. These innovations result in products with improved sustainability profiles, which in turn receive better market responses. Firms that implement such innovations tend to be more open to change, making them more receptive to external stimuli from the competitive environment. As a result, they are more likely to rethink their business models and value chains in terms of sustainability. The spread of a culture of sustainability encourages management to integrate sustainability goals into the strategic process.

The results of this study may have been influenced by the specific characteristics of the sector analyzed, where there is considerable pressure to transform the production system. This pressure is likely to contribute to the relatively high level of proactivity observed among firms with respect to sustainable innovation. However, the longitudinal nature of the study limits our ability to fully understand the specific characteristics of the process innovations implemented. In particular, it remains unclear whether these innovations are irreversible or whether they result in the complete replacement of previous processes. Addressing this question would require a more in-depth longitudinal analysis of the investment policies adopted by firms. The analysis could be further enhanced through international benchmarking, comparing the results of firms operating in the Italian food sector with those of companies in the same industry based in other countries. Furthermore, a multi-year extension of the research, with annual measurement of the variables that make up the SOMC, would make it possible to track their evolution over time and assess their long-term impact on business performance, potentially revealing trends that are not currently observable and better show the dynamic capability capacity.

The implementation of sustainable strategies plays a key role in shaping specific sustainability-oriented investments in product and process innovation, and it is supported by the adoption of targeted communication policies. The elaboration of sustainability-oriented strategies, particularly the strategic planning process, is promoted and guided by the top management team. However, it is informed by middle managers and relies on valuable contributions from frontline managers who maintain direct contact with the market. Furthermore, product and process innovations require specific input from technical staff, whose expertise is essential to translating strategic goals into practical implementation. A longitudinal multiple case study, potentially adopting a cross-country perspective, could provide deeper insights into the formalization process of sustainable strategies. A multiple case study approach would allow us to capture the complexity of this process and the dynamics of strategic intention evolution and decision-making, particularly in terms of investment and communication practices. A longitudinal study based on multiple case studies could ultimately shed more light on why certain firms, particularly SMEs, struggle to implement sustainability-oriented practices, highlighting the role of organizational inertia and the challenges associated with resource development processes.

The authors wish to thank Prof. Federico Carlini from LUISS University for his insightful comments on an earlier draft of this article. We are also indebted to the participants of the European Academy of Management Annual Conference, held in Winterthur, Switzerland, in 2022, for their valuable feedback. The authors are grateful to the two anonymous reviewers whose comments and suggestions were instrumental in improving the manuscript.