Rethinking sustainability strategy in Estonian wood manufacturing firms

Abstract

Sustainability-oriented innovation (SOI) is an increasingly important means for manufacturing firms to address environmental and social challenges while securing economic returns. Manufacturers exposed to similar sustainability pressures respond to them in strategically different ways. In this study, we examine this variation through the lens of behavioral strategy, focusing on the cognitive foundations of strategic reasoning about SOI. More specifically, we ask what mental representations underlie decision-makers’ reasoning about SOI, how these are updated, and how they are associated with patterns of strategic search. Drawing on a qualitative analysis of interview data from export-oriented wood manufacturing firms in Estonia, we identify three recurring representations of sustainability: inherent and operationally settled, externally prescribed, and evaluatively unsettled. In turn, these representations are translated into judgments about specific alternatives through three evaluative filters: definition, relevance, and feasibility. As new pressures arrive, they typically reinforce the criteria already in use rather than alter the representations themselves, so firms’ search for new options remains incremental. This study operationalizes insights from behavioral strategy for SOI, locating the source of its incrementalism less in what firms attend to but in the evaluative criteria through which decision-makers judge possible responses.