When Turbulence Spurs Sustainability: How Networks and Innovation Drive Local Choices

What is it about?

This study examines how shifting market conditions influence firms’ environmental and social responsibility, even when institutions offer little encouragement. Grounded in strategic choice theory, it investigates how market turbulence—rapid changes in preferences, competition, or demand—can drive more sustainable actions. It also explores how network embeddedness, or the strength of stakeholder relationships, explains this process and how a firm’s innovative orientation shapes the extent of this effect. Using data from Ontario restaurants, the study examines why and how firms choose to include local wines despite limited market and institutional support. Findings show that market turbulence promotes sustainable behavior by motivating firms to strengthen network relationships, which then enable sustainable choices. This mediating role of networks is especially strong for innovation-oriented firms, suggesting that innovativeness helps transform environmental challenges into opportunities for sustainable action. For business practitioners and policymakers, these findings emphasize that sustainability can emerge as a strategic response to uncertainty, rather than being purely compliance-driven. Strengthening inter-firm networks and fostering an innovation-friendly culture can help businesses turn turbulent conditions into drivers of positive environmental and social outcomes. Encouraging collaboration among local producers, suppliers, and service providers may be particularly effective in promoting sustainable practices, even when institutional support is limited.

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Photo by Angela Lo on Unsplash

Photo by Angela Lo on Unsplash

Why is it important?

This study highlights an often-overlooked perspective—that market instability can stimulate rather than hinder sustainable business practices, particularly when firms are well connected and forward-looking. By revealing how network relationships and innovation orientation interact to convert market challenges into sustainable opportunities, it extends understanding of the mechanisms linking market dynamics to responsible behavior. At a time when organizations around the world face both economic and environmental uncertainty, these insights show that innovative firms embedded in strong local networks can thrive sustainably, transforming turbulence into a catalyst for responsible growth.