Setting contextual conditions to resolve grand challenges through responsible innovation: A comparative patent analysis in the circular economy

Abstract

Copyright © 2023 The Authors. This article draws on responsible innovation (RI) undertaken by hybrid organizations, institutional rigidity, and national innovation systems (NISs) to assess and contextualize the innovation performance of for-profit firms seeking to resolve grand challenges (GCs). The extant research on RI lacks the theoretical underpinnings to profile the unique characteristics of RI firms and the contextual conditions behind the resolution of GCs through RI. This study aims to fill this important gap by focusing on a specific type of RI firm—a firm seeking to reduce climate change through implementation of a circular economy model. By studying a multi-country sample of 1153 manufacturing firms, we implemented propensity score matching (PSM) and the Heckman selection model to compare the patent productivity of RI and non-RI firms. Our evidence demonstrates that RI firms display lower likelihood of patenting and lower patent productivity than non-RI firms when they do engage in patenting. Furthermore, we found that a stronger national R&D environment can be conducive to aligning public interests and private incentives by enabling RI firms to enhance their patent productivity. Additionally, RI firms in industries with lower levels of technological complexity capture more value from improvements in R&D environments than RI firms in industries with higher levels of technological complexity. Our argument as a whole contributes to the GC and RI literature streams by considering both the innovation barriers faced by RI-oriented firms and the macro/industry boundary conditions that enable such organizations to overcome them.