| Summary: | Ongoing globalization and changing customer needs make it increasingly difficult for firms to survive in the long term. Innovation is considered an important tool for firms in this environment. In particular, a firm’s ability to cultivate innovative behaviour and implement product innovation for sustainability is important. This study explores resources and capabilities to enhance firm innovation behaviour and implementation of sustainable product innovation. The results provide insights on how firms can manage strategies for future sustainable innovations. We used a sample of 645 small- and medium-sized enterprises and presented the conceptual framework according to a resource-based view and relational capital. We specified three independent factors that enhance sustainable innovation and superior performance: market orientation, managerial ties, and government support. We used a questionnaire survey and structural equation modelling to evaluate the conceptual model. We found that interactions between business ties, customers, and competitor orientation can enhance sustainable product innovation, whereas interactions between government support and political relations can enhance the sustainability of innovation behaviour. Moreover, product innovation and innovation behaviour are mediators that can lead to superior firm performance. The results suggest ways entrepreneurs and public policy makers can promote sustainable innovation.
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