Purpose As corporate sustainability becomes increasingly scrutinized, firms must navigate the strategic role of innovation and sustainability to build competitive advantage. This study examines the relationships between social and digital innovation, perceived innovativeness, relative attractiveness, and sustainability while assessing how sustainability communication – annual reports vs. social media – influences these relationships. Design/methodology/approach This research combines data from four primary sources: (1) the Norwegian innovation index, (2) the Norwegian customer barometer, (3) social media data, and (4) annual reports. Extending the Norwegian Innovation Index framework, this study uses partial least squares (PLS-SEM) to analyze how firms’ innovation efforts interact with sustainability communication to create relative attractiveness. Findings Digital innovation indirectly influences perceived innovativeness through social innovation, highlighting the critical role the latter plays in shaping perceived innovativeness. As expected, both perceived innovativeness and sustainability enhance relative attractiveness, suggesting that firms seen as both innovative and sustainable are also viewed as more attractive. The effects of sustainability communication suggest that communication about which sustainability initiatives firms engage in through social media has negative effects, while communication in annual reports of what sustainability initiatives have been done has positive effects. This suggests that sustainability communication has to be treated strategically to avoid the risk of being viewed as green- or wokewashing. Originality/value This study contributes to sustainability and innovation literature by highlighting the interplay between innovation, sustainability, and relative attractiveness. The findings offer actionable insights for managers on communication strategies to maintain credibility and a competitive advantage in an era of Environmental, Social and Governance (ESG) movement backlash. Future research should explore industry-specific communication strategies and the evolving impact of social media on different stakeholders.
Fedji et al. (Mon,) studied this question.