Institutional environment and sustainability-oriented innovation: A systematic review using antecedents, decisions, and outcomes (ADO) framework

The institutional environment is crucial to sustainability-oriented innovation, providing conducive conditions and support for sustainable practices and technologies. This importance is evident across contexts ranging from entrepreneurship to corporate innovation and encompasses regulatory frameworks, market mechanisms, and cultural aspects. Based on a systematic literature review of 60 articles filtered from 532 in the Scopus database and analyzed using the ADO (Antecedents, Decision, and Outcome) framework, the findings show that regulatory frameworks, market mechanisms, and cultural and social norms significantly contribute to sustainability-oriented innovation at the institutional level. The regulatory framework, which includes government regulations and support, elicits compliance and drives investment in sustainable technologies, thereby improving environmental efficiency. Market mechanisms, driven by customer and investor demand, promote sustainability-oriented innovation to enhance corporate reputation and market position. Lastly, cultural and social norms, shaped by public perception and societal expectations, motivate businesses to integrate sustainability into their plans, increasing CSR initiatives and sustainable long-term strategies.