Challenges in measuring sustainable innovations performance: Perspectives from the agriculture plantations industry
AD Nuwan Gunarathne and Mahendra Peiris
Introduction
The achievement of sustainable development goals (SDGs) by 2030 requires urgent action on many fronts, including the promotion of innovations that address not only economic development but also social equity and environmental conservation. Innovations oriented towards sustainability referred to as sustainable innovations hereafter, are considered vital in the transition towards more sustainable economies and societies while mitigating the “the traditional dichotomy between competitiveness and sustainability” (Kiefer, Carrillo-Hermosilla, Del Rio, & Callealta Barroso, 2017, p. 1494).
Policymakers and decision-makers in organizations need a systematic process for evaluating sustainable innovation performance in order to justify the investments, to assess their efficiency and to reward those involved in the process (Gunarathne, 2019). Despite considerable efforts made towards developing measures to evaluate sustainable innovations at national and firm levels, there seems to be little consensus on what should be measured and how they could be measured (Birchall, Chanaron, Tovstiga, & Hillenbrand, 2011; Gunarathne, 2019). As many scholars have pointed out, “you cannot manage what you do not measure.” There should be sound theoretical and methodological approaches, which are also practical for measuring, analysing, evaluating, and communicating sustainable innovation performance for achieving corporate and sustainability goals. Measurement of sustainable innovation performance is a complex and challenging process given the multitudinous impacts the innovations can have on the economic, social, and environmental dimensions (Bocken, Short et ah, 2014; Gunarathne, 2019). The approaches and frameworks for measuring sustainable innovation performance globally remain at a rudimentary and fragmented level (Birchall et ah, 2011; Bocken, Short et ah, 2014; Gunarathne, 2019; Rauter, Globocnik, Perl-Vorbach, & Baumgartner, 2019).
This chapter aims to explore the challenges in sustainable innovation performance measurement at the firm level by focusing on the plantation agriculture industry. Although this research is not very common in sustainable innovation literature, it is of considerable relevance to sustainable innovation performance measurement. The plantation agriculture industry is a form of commercial agriculture found in tropical countries, in which specialized perennial crops1 (e.g., bananas, coffee, tea, rubber, and cacao) are grown primarily for export (Park & Allay, 2014). Currently, large extents of land are used for plantation agriculture in developing countries such as Latin America, Asia, and Africa, where there is a tropical climate. In many countries, the area under plantation crops has expanded rapidly in the last few decades, resulting in a massive loss of native forest cover (Hartemink, 2005).
Despite its close connectivity with the environment and communities, the plantation agriculture industry has not witnessed many innovations that address the industry’s economic, environmental, or social problems (Gunarathne & Peiris, 2017; Joseph, 2014; Oxford Business Group, 2016). This is an anomaly as sustainable innovation is said to be strongly associated with the sector in which a given firm operates, with firms from more environmental and social impact sectors characterized by a higher number of sustainable innovations adoption (Przychodzen & Przychodzen, 2018).
In addition to the economic, environmental, and social significance of this industry in developing countries in the tropics, plantation agriculture is different from other sectors such as manufacturing or services for several reasons. These distinctive features of the industry offer many challenges in measuring sustainable innovation performance.
- • First, plantation agriculture is typically large-scale and export-oriented and a primary foreign exchange earner in the developing countries which are engaged in it. However, for the plantation companies, it poses additional uncertainty as their output is subject to world market agricultural commodity price variations and forex fluctuations (Hartemink, 2005). Therefore, there is a challenge in measuring the economic gains of sustainable innovations that aim to increase the crop yield consistently.
- • Second, due to the labour-intensive nature of the industry (Gunarathne, 2020; Joseph, 2014), to be successful, any sustainable innovations should receive the support of its field-level employees who are often not well educated and are resistant to change. The performance of sustainable innovation at the field level can significantly vary with the level of support of the employees.
- • Third, in many countries, plantation agriculture is highly dependent on weather conditions. Extreme dry or wet seasons, sweeping changes in climate, and other natural disasters significantly affect crop yield. Hence, there is a high level of uncertainty about the outcomes of sustainable innovations at the field level.
- • Fourth, the plantations industry is typified by the possession of a considerable number of biological assets, which are defined as living animals (such as pigs, poultry, cattle) or plants (annual and perennial crops). Since biological assets are living or have an active component that is difficult to maintain, they are subject to a natural transformation process of growth, degeneration, production, and procreation that causes qualitative or quantitative changes in a biological asset. These assets create significant variability in the performance of sustainable innovations.
Due to these reasons, the plantation agriculture industry offers a useful context to explore the challenges in measuring sustainable innovation performance.
The rest of the chapter is organized as follows: the section titled “Sustainable innovations” provides an overview of sustainable innovations by focusing on different definitions and classification methods. “Sustainable innovation performance and measurement” presents what constitutes sustainable innovation performance, measurement aspects, and challenges. The next section, “Sustainable innovations in the plantation agriculture sector,” covers two areas: the tea industry and the sustainable innovations applied in the industry. “Challenges in the measurement of sustainable innovation performance” provides a detailed analysis of the sustainable innovation performance challenges from the plantation agriculture industry, followed by a discussion of the solutions in the “Possible solutions” section. The last section states the conclusions.
