Product innovation processes in sustainability-oriented ventures: A study of effectuation and causation

New ventures are increasingly recognized as candidates for creating novel sustainable products that challenge existing practices. Yet, succeeding in product innovation for such ventures is challenging due to various uncertainties pertaining to product development, potential demand and sustainability impact of their products. This study investigates how sustainability-oriented ventures engage in product innovation processes; in doing so, it builds upon the theory of effectuation, as a useful approach to decision-making under uncertainty. A longitudinal case study on four sustainability-oriented ventures revealed two different approaches to product innovation in such ventures, namely adaptive and exaptive approaches. While an adaptive approach is characterized by a long-term value proposition a venture engages in, and high fidelity design experiments used to get the commitment of a select number of stakeholders to develop this predefined value proposition, an exaptive approach is characterized by short-term multiple value propositions a venture engages in, and low-fidelity affordable design experiments used to test market potential of these propositions through various stakeholder interactions. Moreover, the way new ventures define their value propositions in relation to sustainability appears to influence the approach they adopt for the product innovation process. While the ambition to transform a particular market towards sustainable practices causes ventures to anchor on a target market, which appears to stimulate an adaptive approach, the ambition to develop a product that can replace existing products or provide similar sustainability benefits in a number of markets causes firms to anchor on a product idea, which appears to stimulate an exaptive approach. We conclude that future studies should explore the implications of different approaches in order to identify best practices for new ventures engaged in product innovation for sustainability.