# Maximising Sustainable Performance: Integrating Servitisation Innovation into Green Sustainable Supply Chain Management under the Influence of Governance and Industry 4.0

Fadi Alkaraan, Mahmoud Elmarzouky, Ana Beatriz Lopes de Sousa Jabbour, Charbel Jose Chiappetta Jabbour, Nadia Gulko

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Fadi Alkaraan, Mahmoud Elmarzouky, Ana Beatriz Lopes de Sousa Jabbour, Charbel Jose Chiappetta Jabbour, Nadia Gulko. Maximising Sustainable Performance: Integrating Servitisation Innovation into Green Sustainable Supply Chain Management under the Influence of Governance and Industry 4.0. Journal of Business Research, 2025, 186, pp.115029. 10.1016/j.jbusres.2024.115029. hal-04846579

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# Maximising sustainable performance: Integrating servitisation innovation into green sustainable supply chain management under the influence of governance and Industry 4.0

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Fadi Alkaraan<sup>a, *,</sup>, Mahmoud Elmarzouky<sup>b</sup>, Ana Beatriz Lopes de Sousa Jabbour<sup>c</sup>, Charbel Jose Chiappetta Jabbour<sup>d</sup>, Nadia Gulko<sup>e</sup>

## ARTICLE INFO

### Keywords:

Green servitisation innovation

Green sustainable supply chain management

Industry 4.0 technologies

Business innovation strategies

ESG performance

Corporate governance

Product

Service innovation

## ABSTRACT

This study investigates the critical pillars of corporate transformation towards a green servitisation-oriented business model (GS-OBM) and environmental, social, and governance (ESG) performance. This study integrates multiple theoretical lenses rooted in resource-based theory (RBT). We empirically examine the interdependencies between green servitisation innovation, green sustainable supply chain management (GSSCM) practices, Industry 4.0, technology adoption, and corporate governance structure. This study uses a mixed-methods research paradigm and multiple datasets from the UK Innovation Survey (UKIS) 2021. The empirical study is based on FTSE companies listed on the London Stock Exchange over the period (2012–2021) with 1580 firm-years observation and extracts from corporate annual reports. We find that Industry 4.0 technology adoption facilitates the integration of green servitisation innovation strategies into GSSCM. Further, the synergic effects of corporate governance structure and Industry 4.0 technologies strengthen the nexus between green servitisation innovation trajectories and GSSCM practices towards GS-OBM and ESG performance. Our results add to the empirical evidence on the complementarities between the key pillars that reinforce GS-OBM and ESG performance. The findings of this study offer insights into the contextual factors surrounding radical innovation trajectories and their impacts on GSSCM practices and corporate transformation towards GS-OBM in the UK context. The results have managerial and theoretical implications based on a holistic perspective and can be adopted by other boardrooms as a benchmark approach to corporate transformation towards GSSCM and GS-OBM to maximise ESG performance.

## 1. Introduction

Corporate business models transformation towards environmental, social, and governance (ESG) revolutionised the conventional practices of supply chain management to green sustainable supply chain management (GSSCM) practices. GSSCM practices focus on formulating and implementing sustainable environmental strategies (Jabbour and de Sousa Jabbour, 2016). Business innovation strategies catalyse economic system renewal (Del Giudice et al., 2023). Green servitisation innovation is an umbrella combining product and service innovation

trajectories and can be viewed as a basic building block for corporate transformation towards a green sustainable-oriented business model (GS-OBM). Yet, successful implementation of GS-OBM contingent on effective internal and external governance structures, Industry 4.0 technology adoption and successful implementation of GSSCM. A recent study by Bustinza et al. (2024) offers valuable insight into the intricate nexus between product-service innovation and green supply chain management and sheds light on the influence of technological adoption in improving environmental performance, sustainable practices, and the synergistic effect of technological innovation and product life cycle.

<footnote><sup>a</sup> University of Lincoln, UK & Gulf Financial Center, Gulf University for Science and Technology, Kuwait</footnote>

<footnote><sup>b</sup> University of St Andrews, UK</footnote>

<footnote><sup>c</sup> EM Normandie Business School, Metis Lab, France</footnote>

<footnote><sup>d</sup> NEOMA Business School, France</footnote>

<footnote><sup>e</sup> University of Lincoln, UK & North-West University, South Africa</footnote>

<footnote>* Corresponding author.</footnote>

<footnote>E-mail addresses: Falkaraan@lincoln.ac.uk (F. Alkaraan), mahmoud.elmarzouky@st-andrews.ac.uk (M. Elmarzouky), bsousajabbour@em-normandie.fr (A.B. Lopes de Sousa Jabbour), c-j.chiappetta-jabbour@neoma-bs.fr (C.J. Chiappetta Jabbour), ngulko@lincoln.ac.uk (N. Gulko).</footnote>
Song et al. (2022) articulate the topics underpinning GSSCM in platform economies, including technological innovations that support GSSCM. Manufacturing companies adopt Industry 4.0 technologies to strengthen value-creation processes through various collaboration activities relevant to the supply chain, and leverage companies' capabilities by optimising and controlling mechanisms (Gebauer et al., 2020). Industry 4.0 technologies enable the exploitation of green services and allows companies to implement and control their sustainability initiatives, including restoration, waste management and emission reduction, raw material recycling, and water and energy conservation (Kumar et al., 2024).

Prior studies on servitisation merely emphasise technological adoption (Khan et al., 2022). However, empirical evidence on the influence of contextual factors on GS-OBM and ESG performance is limited. Little attention has been directed by prior research on the interdependencies and complementarity between GSSCM, green business innovation strategies, Industry 4.0 technologies and governance structure, and their combined impact on the corporate transformation of GS-OBM and CSP. Kumar et al. (2024) reveals that green servitisation mediates and ESG compliance moderates the association between industry 4.0, technologies, green practices, and green supply chain performance. The authors noted that this research domain has not been widely explored. Insufficient empirical studies aim to clarify the nexus between green supply chain management and ESG-oriented servitisation innovation strategies (Bustinza et al., 2024). Little is known about how GSSCM practices can enhance organisational performance (Chatterjee et al., 2023), particularly ESG performance. However, the influence of corporate governance structure on the relationship between these domains has not yet been empirically investigated. Furthermore, the interdependencies between the above-articulated domains have not been examined empirically, at least within the UK context. Our study fills this gap in the extant literature and enriches our understanding by adopting a perspective and an empirical study of the interdependencies between the abovementioned domains and their impact on corporate transformation towards GS-OBM. The research question underlying this study is as follows:

RQ: What are the critical pillars that empower corporate transformation towards a green servitisation-oriented business model (GS-OBM) and have a long-term impact on ESG performance?

The conceptual framework underlying this study is rooted in a multi-theoretical perspective. This framework enriches our understanding of the reasoning and causality regarding the interdependencies and complementarity between GSSCM, green business innovation strategies, Industry 4.0, technologies, governance structures, and their combined impact on corporate GS-OBM transformation and corporate sustainability performance (CSP). To the best of our knowledge, this study is among the first to offer a holistic view of these domains' interdependencies and their combined impact on GS-OBM and ESG performance.

Our study offers insights into the current practices of corporate transformation towards GS-OBM and CSP using a mixed-method research approach rooted in three levels of analysis: macro, meso, and micro perspectives. The macro-level perspective sheds light on the country context by exploring the key characteristics underpinning current business innovation strategies within the UK based on a recent survey (2021) of UK business innovation. We employed a meso-level perspective in the empirical analysis to examine the hypotheses of this study. The micro-level perspective is used through narrative extracts from the annual reports of leading companies, including CEOs and chair statements. Our empirical study is based on data triangulation rooted in quantitative and qualitative research paradigms to offer a holistic perspective on the underlying research questions. This mixed research approach strengthens the credibility and validity of our findings. The data employed in this study were selected from (i) the UK Innovation Survey (UKIS) 2021; (ii) the FTSE; that is, all companies listed on the London Stock Exchange; and (iii) narrative extracts from corporate disclosures selected from the annual reports of large UK companies.

The remainder of this paper is organised as follows. Section two outlines the current study on innovation strategies and develops the hypotheses. We provide the rationale for this research methodology. Section four presents the results of this study, followed by a conclusion and suggestions for future research in section five.

# 2. Literature review and hypotheses development

## 2.1. Conceptualisation

Traditional manufacturing companies typically derive competitive advantages from capabilities based on extensive product and process knowledge, research and development (R&D), patents, and manufacturing excellence, which facilitate the creation and delivery of various product-related offerings (Khan et al., 2022).

Successful corporate transformation into a GS-OBM requires acquiring new resources and developing service-related capabilities through supply chains. Strengthening companies' strategic capabilities is contingent on the boardrooms' strategic agility and organisational ambidexterity, exploitation, sensing, and seizing opportunities to enter new markets or strengthen their position in existing markets through value creation, capture, and realisation.

Servitisation and Industry 4.0 technologies are two pivotal issues associated with the recent research on green innovation strategies and GSSCM performance. Scholars, practitioners, and policymakers are increasingly interested in the potential for servitisation and integration of the supply chain business with business model innovation (Freije et al., 2022). From the resource-based theory (RBT) perspective, a company's superior performance and competitiveness depend on the level of its digital assets. Magni et al. (2023) explored the relationship between the use of electronic documents in servitisation processes (formal-codified knowledge), personal advice in servitisation (informal-feedback knowledge), and knowledge sharing in internationalised knowledge-intensive business service companies. Their findings shed light on the indirect effect assumed in the hypothesis between knowledge transformation and knowledge sharing which is positively moderated by the adoption of cross-cultural knowledge practices through servitisation. Knowledge-based theory also represents a basic approach for leveraging international collaborative alliances to allow firms to share tacit and explicit international knowledge in international knowledge-intensive business scenarios.

Drawing on RBT, the digital component of digital servitisation reinforces GSSCM practices by integrating green external resources more efficiently, thereby increasing customisation, order delivery effectiveness, and efficiency. From the RBT perspective, the intangibility, ambiguous causality, and social complexity embedded in business innovation strategies and collaborative activities in the supply chain can be sources of sustainable competitive advantage. The synergistic effects of collaborative activities and various innovation trajectories are inherent in servitisation-oriented business models (Freije et al., 2022).

Companies lacking certain resources develop relationships with other stakeholders to access both tangible and intangible assets. From the perspective of resource dependence theory, increased board commitment to ESG performance and CSP can increase access to crucial financial resources, including trade credit. Resource dependence theory emphasises collaboration across organisational boundaries. Resource dependence theory is broadly employed across various research domains to explain how organisations reduce the risk and uncertainty associated with corporate transformation towards GS-OBM and CSP.

Based on the above debate, we adopt multi-theoretical lenses as complementary rather than competing paradigms. The combined lenses of these theories enable the authors to offer a comprehensive view of the essential pillars driving corporate transformation towards GS-OBM and CSP.
## 2.2. Corporate transformation for GS-OBM and ESG performance: Integrating green servitisation innovation into GSSCM

### 2.2.1. Synergy between green servitisation innovation and GSSCM

Green servitisation innovation trajectories enable successful GSSCM practices through various stages of manufacturing operational processes, such as design, sourcing, products and services, suppliers, transportation, disposal of products, and improvement of organisational operational efficiency and profitability.

GSSCM practices relate to specific mechanisms for implementing and maintaining environmental management systems that focus on green products (Jabbour and Santos, 2008). Song et al. (2022) articulate the current issues of GSSCM in platform economies, including platform-based GSSCM, technological innovation adoption that supports GSSCM, and data-driven sustainable development. They point out that most research streams emphasised the contribution to sustainable development and other related influencing factors of supply chain management associated with the platform economy because of the urgent pragmatic actions required to reduce environmental pollution. Assumpção et al. (2022) conceptualise the associations between eight GSSCM practices and business innovation domains. These include customer cooperation, eco-design, green compliance, green marketing, green purchasing, internal environmental management systems, investment recovery, and reverse logistics. Customer cooperation involves cooperative relationships with stakeholders. Customer-cooperation-oriented GSSCM practices include environmental packaging, green production, and green manufacturing. Eco-design system-oriented GSSCM practices include product lifecycle, disposal projects, reduction, material hazard elimination, reuse and recycling, material recovery, clean manufacturing technologies, and ecological packaging. Green compliance-oriented GSSCM relates to risks, risk-mitigation strategies, and boardroom commitments. This includes environmental compliance and audit processes that respond to stakeholder expectations and board commitments to climate governance. Green marketing-oriented GSSCM, green image management practices, innovation mechanisms to strengthen R&D to reduce the costs of production and services, and training for green practices. Green purchasing-oriented GSSCM relates to purchasing policies including ecological concerns regarding raw materials, supplier operational processes, packaging, recycling, and resource reduction across supply chains. Internally oriented GSSCM practices include the certification and accreditation of environmental management systems, integration of environmental management systems into planning and control mechanisms, control of pollution resulting from operational processes, and reduction or elimination of the use of toxic and hazardous materials. Investment recovery involves selling unused materials, outdated equipment, or other types of assets that are no longer valuable to companies. Investment recovery is a key component of GSSCM practices because it reduces waste generation and extends the lifecycle of equipment. Reverse logistics-oriented GSSCM practices are related to managing return flows from various types of asset recovery by recusing product materials during appropriate manufacturing processes. These include resale, recycling, recovery, and renewal activities (Assumpção et al., 2022).

### 2.2.2. Reinforcing the synergy between servitisation and GSSCM via Industry 4.0 technologies and a governance structure for GS-OBM

Environmental issues remain a pivotal matter, reflecting the increased concern of stakeholders, including standard setters, regulatory bodies, individual and institutional investors, communities, and governments regarding the environmental impacts of organisational operational processes. Green innovation strategies leverage company performance (Yu et al., 2022; Alkaraan et al., 2023a). Cegarra-Navarro et al. (2019) find that an open organisational culture influences business performance, and product and service innovation in environmentally friendly technologies strengthens business performance. GSSCM practices can be viewed as an environmentally holistic approach to supply chain flows. However, how servitisation innovation may enhance green supply chain management with improved environmental performance is not addressed clearly in the extant literature.

Digital transformation has become imperative over the last two decades. Prior research explores the potential benefits of information and communication technologies for firms and their collaboration with stakeholders. Pizzichini et al. (2023) examine the role of digital knowledge servitisation in supply chain management. Their results reveal how digital servitisation processes affect the supply chain business model. Singh et al. (2024) explore the nexus between green open innovation and the circular economy, and examined the role of big data management and sustainable supply chains. Their study was based on a self-administered survey of 294 participants in the cement, electronics, tyres, rubber, and energy sectors. Their results indicate a positive association between big data management, big data capability, and knowledge management. Green open innovation was also observed as a moderating variable in the nexus between big data capability and sustainable chain performance and between knowledge management and sustainable supply chain performance.

Digital servitisation highlights the importance of the co-evolution of governance (Jovanovic et al., 2022) and the crucial role of organisational governance in understanding servitisation (Xing et al., 2023). Husted and de Sousa-Filho (2019) explore the impact of sustainability governance, country stakeholder orientation, and country risk on ESG performance. The increased pressure from stakeholders and wide recognition of the pivotal role of greener activities have led companies to implement green processes throughout the production stages (Jabbour et al., 2015, 2019). Ukko et al. (2019) explore how sustainability strategies moderate the relationship between digital business strategies and financial performance. Industry 4.0 technologies are instrumental mechanisms that enable companies to cope with a highly competitive business environment and strengthen their performance (Alkaraan et al., 2022). Industry 4.0 technology adoption and successful GSSCM practices contribute to ESG and companies' sustainable performance (CSP) by engaging in various innovative eco-design trajectories (Alkaraan, 2021; Soh and Wong, 2021; Yu et al., 2022). Industry 4.0: Technologies strengthen manufacturing proactiveness and create green sustainable supply chain management opportunities through product planning and marketing (Jabbour et al., 2019). Jovanovic et al. (2022) discuss three domains of industrial digital platforms-products, supply chains, and ecosystems-and explore how the innovation mechanisms embedded in these three domains contribute to value creation. Benitez et al. (2020) viewed innovation ecosystems in Industry 4.0, as an evolutionary paradigm of value creation and capture. In Industry 4.0, technologies leverage company capabilities to make products and services smarter (Raff et al., 2020) and unlock opportunities for various innovation activities (Lanzolla et al., 2020). Industry 4.0 technologies facilitate the large-scale transformation of organisational processes and companies' capabilities to create, deliver, and capture service values from various domains of enabling digital technologies.

Organisational operational performance relies on companies' capabilities to reduce or eliminate scrap rates and delivery times and improve product quality (Jabbour and de Sousa Jabbour, 2016). Prior studies reveal that business model transformation activities towards Industry 4.0 technologies and ESG performance strengthen companies' performance (see Hussainey et al., 2022; Alkaraan, 2022; and 2023b). Heubeck (2023) investigates the relationship between CEOs and the board of directors in the context of ESG performance and shed light on the moderating impact of board gender diversity on the relationship between dynamic CEOs capabilities and ESG performance.

Based on these debated issues, we postulate the following three hypotheses to examine the interdependencies between the aforementioned critical pillars reinforcing corporate transformation towards GS-OBM and ESG performance in the UK context:
<figure><img src="image_5.png" /><figcaption>**Fig. 1.** Innovation strategies and GSSCM practices towards green servitization-oriented business model (GS-OBM) and sustainable performance Source: Authors' own creation.</figcaption></figure>

H1: Industry 4.0 technology adoption mediates the relationship between green innovation strategies and GSSCM practices towards GS-OBM and ESG performance.

H2: Corporate governance mechanisms mediate the relationship between green innovation strategies and GSSCM practices on GS-OBM and ESG performance.

H3: The combined impact of Industry 4.0 technology adoption and governance mechanisms strengthen the relationship between green innovation strategies, GSSCM practices on GS-OBM, and ESG performance.

The conceptual model underlying this study is illustrated in Fig. 1 and is rooted in de Sousa Jabbour et al. (2018) and Song et al. (2022).

# 3. Research methodology

To offer a holistic perspective on the research question of this study, we adopt a mixed-methods research paradigm that focuses qualitative and quantitative collection methods (Edwards et al., 2020). Triangulation research methodologies help authors interpret their findings (Tashakkori and Newman, 2010).

## 3.1. Data collection

This data collection method (multiple datasets) offers depth and breadth in interpreting and validating the results based on complementary findings (Murphy and Maguire, 2011; Castleberry and Nolen, 2018). Accordingly, the data collection method includes three stages:

The UK innovation survey (UKIS) 2021 (macro perspective): The UK innovation survey (UKIS) 2021 is the 12th UKIS. This survey has been conducted every two years since 2005 and collects information regarding innovation activities over three years (2018–2020). Innovation is considered to be a significant improvement in goods and services. These innovation trajectories may be novel to businesses and markets. A

more recent survey (UKIS, 2021) was based on a sample of 31,928 UK businesses. Where appropriate, we compared the results from to 2008–2010 using the UK-SIC 2007

Extracts from corporate narrative disclosures, including CEO and chair statements for a large and leading UK company covering various sectors, including Rolls Royce, Unilever, British Petroleum, Rio Tino, and Astra Zeneca. These companies are among the largest in the UK (FTSE 100). We use inductive approach to thematic analysis based on pre-comprehended themes that are inherent in our conceptual framework, as depicted in Fig. 1, and are rooted in multi-theoretical lenses and prior studies of GSSCM practices. This consists of six steps to address the research question underlying our study: Familiarisation (reading through companies’ annual reports), coding, generating themes, reviewing themes, defining themes, and writing thematic analysis. We employ thematic analysis following the processes described by Braun and Clarke (2006) and Bryant and Charmaz (2019)

i. Become familiar with the key constructs underpinning this study. Reading, including related annual report contents for the chosen companies, and writing initial concepts.

ii. Generate initial codes: coding the relevant data by highlighting sections from companies’ annual reports, paragraphs, or sentences.

iii. Search for themes: Labelling the related themes into potential themes and gathering data into themes relevant to each code from companies’ annual reports using green highlights. We merged the codes into themes as shown in Table 1.

iv. Generate the appropriateness of the selected themes in relation to the coded extracts and generate a thematic map.

v. Define and name themes.

vi. Produce related narratives and select compelling extracts to support the interpretation of the empirical study by strengthening the content and context.
<table><caption>**Table 1**
Key pillars underlying green servitization-oriented business model (GS-OBM).</caption><thead><tr><th>Themes</th><th>Codes</th><th>Extracts</th></tr></thead><tbody><tr><td rowspan="3">Green sustainable supply chain management (GSSCM) practices</td><td>Customer oriented green projects (C-OGP)</td><td>"....power must be made compatible with combatting climate change. As our customers increasingly search for more sustainable solutions .......</td></tr><tr><td>Eco-design (Eco-D)</td><td>"enabling our customers to use the products in a way that is compatible with sustainable fuels (RR, AR, 2022, p10-11) "...As we develop greener solutions for future use, nuclear and electrification applications .... making our operations net zero carbon;..."(RR, AR, 2022, p28-31) "We will look for new options ... with our ESG standards" (CEO, RT, AR, p.13, 2021) '... make progress in new technology investments. We also achieved a 6.2 % reduction in the operational energy consumption of our site". (AZ, AR, 2022, p.42) 'Our supplier ecosystem has millions of people who provide goods and services, such as raw materials, logistics, advertising, and professional services". ....... s'. (CBO, U AR, p.27). The materials used in current products may not be the preferred choice in the future if they cannot establish environmental, social, and governance (ESG) credentials or develop strong circular solutions......(RT, AR, p107,2021) "........ as large scale solar, battery storage and renewable heat networks". ...."We continue to invest in these technologies along with our partners and we use our combined expertise to progress on the path to net zero" (RR, AR, 2022, p28-31) "We must remain focused on our services strategy, .... extending the life of our products in service also means enabling our customers to use them in a way that is compatible with net zero" "For all investment cases, we consider whether the investment case supports ....our net zero aims." (BP, AR, p.34) We capitalise on resource efficiency opportunities by generating renewable electricity at..., targeting emission reduction from our logistics supplier. (U, AR, 2022, p38) "... we are transforming our business from supplying stand-alone engines to fully integrated products and services" (RR, AR, 2022, p27) "We continued to invest prudently in new technologies, product and services" "with novel technologies</td></tr><tr><td>Green-compliance (G-Comply)</td><td></td></tr><tr><td>Green marketing process (GMP)</td><td></td></tr></tbody></table>

<table><caption>**Table 1 (continued)**</caption><thead><tr><th>Themes</th><th>Codes</th><th>Extracts</th></tr></thead><tbody><tr><td rowspan="3">Green-oriented procurement (GOP)</td><td>Green-oriented procurement (GOP)</td><td>opening up new markets and significant growth opportunity". "the procurement of renewable energy and continued implementation of energy efficiency improvements to reduce our overall energy demands and associated costs...."..."Our due diligence activities are embedded within our ethics, people, export control and procurement programmes" (RR, AR, 2022, p.32). "We monitor our suppliers' compliance. In 2022, we will conduct 42 audits of high-risk commercial suppliers (external manufacturing partners). Our procurement sustainability approach supports our suppliers' sustainability progress". (AZ, AR, 2022, p.42) "Only projects which demonstrate satisfactory scores against these criteria will be considered for investment.... environmental, social and governance....." "Our priorities are clear. .... play a key role in the energy transition" (CEO, RR, AR, 2022, p7-8) "The Safety, Ethics & Sustainability Committee receive regular updates from the environment & sustainability committee which covers science-based targets, ESG assessments(RR, AR, 2022, p.68) "We are tackling rising costs and supply chain constraints by repairing and reusing spare parts where we can". (CFO, RR, AR, 2022, p.14) "... utilising lean engine overhaul methods, increased re-use of parts, more repair of parts and advanced repair technologies are reducing our shop visit costs...." Directors make decisions relating to net zero ambitions and proposals to divest or invest"...." activities to improve liquidity such as .... divesting parts of our business. RR, AR, 2022, (p.23-50) "including logistics, quality and procurement to make the business more resilient and to focus all suppliers on supply chain resilience" (RR, AR, 2022, p.54) "We partner with Alibaba across 13 markets. .... In March 2021, we launched a joint innovation centre in Hangzhou, China"(U, AR, p.26) "Rolls-Royce Electrical entered into a partnership with Hyundai Motor Group to collaborate on all-electrical propulsion and hydrogen fuel cell technology" (Chair, RR, AR, 2022, p.4)</td></tr><tr><td>Internal environmental management system (IEMS)</td><td></td></tr><tr><td>Investment recovery</td><td></td></tr><tr><td>Reverse logistic</td><td></td></tr><tr><td>Partnership/ collaboration</td><td>Partnership Collaboration</td><td></td></tr></tbody></table>

(continued on next page)
<table><caption>**Table 1 (continued)**</caption><thead><tr><th>Themes</th><th>Codes</th><th>Extracts</th></tr></thead><tbody><tr><td>Corporate governance structure (CGS)</td><td>Accountability and responsibility</td><td>“We build meaningful relationships with partners across the value chain”. (RR, AR, 2022, p.14)<br/>“Building long-term relationships with our customers through service packages”<br/>“Collaboration will play a key role in our Rolls-Royce Electrical ...... different avenues for net zero travel. We entered into partnership this year with EVE “(RR, AR, 2022, p.28)<br/>“Board involvement in climate governance. The Board also took tangible steps during the year to remain abreast of current best practice in terms of climate change reporting. During 2022, we received tailored training on climate-related matters” (Chair, RR, AR, 2022, p.5)<br/>“Oversight of the development of a climate-related governance structure, TCFD reporting and separate Climate Review” (RR, AR, 2022, p.96)<br/>“We use digital tools and skills across our business to drive operational efficiency and quality service” (RR, AR, 2022, p.14)<br/>‘We’ve stepped up our investments in science and technology to strengthen the quality and efficacy of our products’. (CEO, U, AR, p.15)<br/>“State-of-the-art software solutions were implemented to allow Power Systems to detect supply chain risks at an early stage. Solutions included real time information for buyers and management”<br/>“Strategic investment in digital charging solutions with Mercedes-Benz and BMW, a leading developer of digital charging software for automotive manufacturers” (BP, AR, p.16).</td></tr><tr><td>Industry 4.0</td><td>I4.0Ts</td><td></td></tr></tbody></table>

Source: Authors' own creation

The coding processes includes highlighting sections in the company's annual report, paragraphs, or sentences, and describing the content based on labels/codes. The codes/labels are based on innovation and GSSCM practices, as highlighted by Song et al. (2022), Assumpção et al. (2022), and Kumar et al. (2024).

The above approach is followed by empirical analysis and hypotheses testing. The sample for the empirical analysis and hypothesis testing is based on all FTSE companies listed on the London Stock Exchange. These are large UK companies ranked based on market capitalisation

## 3.2. Research model

We use a regression model to examine the three hypotheses underlying this study. Table 2 presents the definitions of the proxies employed in this study. We formulated the following regression models to examine the three hypotheses of this study:

<table><caption>**Table 2**
Variable definitions.</caption><thead><tr><th>Proxies</th><th>Symbols</th><th>Definitions</th></tr></thead><tbody><tr><td>Green sustainable supply chain management</td><td>GSSCM</td><td>Principal components analysis (PC) used to reduce number of variables and enable to learn about GSSM structure</td></tr><tr><td>Governance Mechanisms</td><td>GOVMs</td><td>Principal components analysis (PC) used to reduce number of variables and enable to learn about the underlying governance structure of the UK companies</td></tr><tr><td>Technological adoption</td><td>I4.0Ts</td><td>Percentage of technological adoption disclosure using a comprehensive dictionary based on wordlist (bag of words) designed to capture as many different words as possible relating to Industry 4.0 technologies adoption</td></tr><tr><td>Companies sustainable performance</td><td>CSP</td><td>Principal components analysis (PC) used to reduce number of variables regarding assessing companies' sustainable performance, selected proxies: Environmental, Social, and Governance (ESG), Tobins'-Q, ROA.</td></tr><tr><td>Firm size</td><td>FSIZE</td><td>Natural log of total assets of the company.</td></tr><tr><td>Financial leverage</td><td>LEV</td><td>Long term debt/total assets</td></tr><tr><td>Year</td><td>YEAR</td><td>Year dummy to control for year effects.</td></tr></tbody><tfoot><tr><td colspan="3">Source: Authors' own creation</td></tr></tfoot></table>

$$ CSP = \alpha_0 + \beta_1 ISsGSSCM_{it} + \beta_2 I4.0Ts_{it} + \sum_{i=1}^{n} \beta_i CONTROLS_{it} + \varepsilon_{it} \quad (1) $$

$$ CSP = \alpha_0 + \beta_1 ISsGSSCM_{it} + \beta_2 GOVMs_{it} + \sum_{i=1}^{n} \beta_i CONTROLS_{it} + \varepsilon_{it} \quad (2) $$

$$ CSP = \alpha_0 + \beta_1 ISsGSSCM_{it} + \beta_2 I4.0Ts_{it} \times GOV_{it} + \sum_{i=1}^{n} \beta_i CONTROLS_{it} + \varepsilon_{it} \quad (3) $$

# 4. Results and discussion

## 4.1. Current trend of innovation strategies in large UK companies

Fig. 2 illustrates the trend of innovation trajectories over the 2018–2020 period. The current trend of innovation strategies in the UK focuses on four innovation trajectories: (i) organisational innovation, (ii) product-oriented innovation, (iii) process-oriented innovation, and (iv) marketing-oriented innovation (i). These innovation trajectories of corporate transformation towards GS-OBM include new or significantly improved products, services or processes, business structures and practices, new marketing concepts, internal and external R&D activities, training for innovation, mergers and acquisitions, acquisition of external knowledge or machining and equipment, and scaled-back activities. The UK innovation concept is based on the OECD definition articulated in the Oslo Manual of 2018.<fnref n="1" /> Fig. 2 shows that broader innovation is ranked as the top priority for 60 % of the UK companies. Over the last decade (2010–2020), more than 50 % of large UK companies were innovation-active, 44 % were broader, and 35 % were wider. Fig. 3 illustrates innovation activities by sector over the 2010–2020 period. The

<footnote n="1">¹ https://www.oecd.org/science/oslo-manual-2018-9789264304604-en.htm.</footnote>
<figure><img src="image_6.png" /><figcaption>**Fig. 2.** Percentage of large UK companies engaging in innovation activities (2010–2020). Source: Authors’ own creation.</figcaption></figure>

<figure><img src="image_7.png" /><figcaption>**Fig. 3.** Innovation active in UK companies by sector (2010–2020).</figcaption></figure>

innovation trajectories in the UK are derived from the engineering-based manufacturing sector and knowledge-intensive services Fig. 3.

To remain competitive, companies must rely on collaboration and partnerships through corporate transformation towards GS-OBM. As Table 3 shows, the four innovation trajectories (product, process, marketing, and organisational) are based mainly on collaboration

arrangements and partnerships across the whole supply chain: suppliers, customers, competitors, or other businesses within the industry sector or outside the industry group, universities, and other research centres/institutions, government and public research centres, and other stakeholders including non-profit organisations.

The UK manufacturing sector employs 2,7 million people, represents
<table><caption>**Table 3**
Collaboration arrangements-broader innovators.</caption><thead><tr><th>Collaboration arrangement with</th><th>Percentage of businesses 2014–2016</th><th>Percentage of businesses 2016–2018</th><th>Percentage of businesses 2018–2020</th></tr></thead><tbody><tr><td>Suppliers</td><td>81.7</td><td>73.8</td><td>78.4</td></tr><tr><td>Private sector customers</td><td>71.2</td><td>58.2</td><td>68.4</td></tr><tr><td>Business from the same- industry group</td><td>63.8</td><td>44.9</td><td>49.6</td></tr><tr><td>Competitor/s in the same-industry sector</td><td>48.8</td><td>31.6</td><td>41.5</td></tr><tr><td>Public sector customers</td><td>50.8</td><td>32.7</td><td>39.6</td></tr><tr><td>Business from other industrial groups</td><td>NA</td><td>36.1</td><td>37.4</td></tr><tr><td>R&D centres and consultants</td><td>48.6</td><td>28.5</td><td>35.4</td></tr><tr><td>Higher education institutions</td><td>37.3</td><td>20.0</td><td>20.4</td></tr><tr><td>Government or public research institutes</td><td>32.3</td><td>15.5</td><td>18.4</td></tr><tr><td>Non-profit organisations (from 2016 to 2018 onwards)</td><td>NA</td><td>17.4</td><td>16.3</td></tr><tr><td colspan="4">Co-operation (broader innovators, collaborative firms only) by type of partner, 2018 to 2020</td></tr><tr><td></td><td>Engineering-based manufacturing</td><td>Other manufacturing</td><td>Construction</td><td>Retail &amp; distribution</td><td>Knowledge intensive services</td><td>Other services</td></tr><tr><td>Other businesses within enterprise group (%)</td><td>55.1</td><td>47.8</td><td>49.8</td><td>57.1</td><td>57.2</td><td>46.7</td></tr><tr><td>Suppliers (%)</td><td>76.4</td><td>76.2</td><td>80.2</td><td>83.8</td><td>74.1</td><td>74.8</td></tr><tr><td>Customers from the private sector (%)</td><td>70.2</td><td>65.5</td><td>74</td><td>65.1</td><td>75.1</td><td>67.4</td></tr><tr><td>Customers from the public sector (%)</td><td>38.7</td><td>35.5</td><td>60.6</td><td>35.6</td><td>42.3</td><td>47.5</td></tr><tr><td>Competitor within the same industry (%)</td><td>42.9</td><td>38.8</td><td>51.9</td><td>41</td><td>44.3</td><td>50.2</td></tr><tr><td>R&D/ consultants</td><td>48.2</td><td>38</td><td>40.5</td><td>31</td><td>44.8</td><td>32.8</td></tr><tr><td>University/s HEIs (%)</td><td>35.2</td><td>22.5</td><td>29.1</td><td>13.3</td><td>31.9</td><td>21</td></tr><tr><td>Government or public research institutes (%)</td><td>27.1</td><td>15.2</td><td>25.3</td><td>16.3</td><td>25.7</td><td>23.2</td></tr><tr><td>Other businesses outside your enterprise group (%)</td><td>46.7</td><td>35.8</td><td>41.3</td><td>35.8</td><td>39.2</td><td>40.8</td></tr><tr><td>Non-profit organisations (%)</td><td>10.8</td><td>12.9</td><td>22.7</td><td>15.2</td><td>19.5</td><td>24.8</td></tr></tbody><tfoot><tr><td colspan="7">Source: Authors' own creation</td></tr></tfoot></table>

<figure><img src="image_8.png" /><figcaption>**Fig. 4.** Percentage of companies' innovation investment expenditure over the period 2016–2020 Source: Authors' own creation.</figcaption></figure>

69 % of business R&D, contributes 11 % of GVA, and accounts for 45 % of total exports.<fnref n="2" /> The current trend of innovation strategies in UK companies can be viewed as a radical innovation towards the green manufacturing process of GSSCM. Such radical innovation strategies

enable companies to reduce costs, increase manufacturing process efficiency, and develop green products. Innovation strategies in UK companies are rooted in a strong economy; advanced manufacturing companies; and strong specialisation in chemicals, semiconductors, and software (Parrilli et al., 2020). Industrial manufacturing companies, mainly engineering-based manufacturing companies and knowledge-intensive service companies, primarily derive the innovation strategies

<footnote n="2">² Office of National Statistics.</footnote>
<table><caption>**Table 4**
Correlation between the key pillars empowering innovation strategies and GSSCM practices towards corporate transformation to GS_OBM and CSP.</caption><thead><tr><th>Variables</th><th>(1)</th><th>(2)</th><th>(3)</th><th>(4)</th><th>(5)</th></tr></thead><tbody><tr><td>(1) CE</td><td>1.000</td><td></td><td></td><td></td><td></td></tr><tr><td>(2) RDI</td><td>0.000</td><td>1.000</td><td></td><td></td><td></td></tr><tr><td>(3) PPEG</td><td>0.739</td><td>0.623</td><td>1.000</td><td></td><td></td></tr><tr><td>(4) CAPEX</td><td>0.667</td><td>0.722</td><td>0.937</td><td>1.000</td><td></td></tr><tr><td>(5) AGE</td><td>0.662</td><td>0.576</td><td>0.867</td><td>0.757</td><td>1.000</td></tr></tbody></table>

Our composite five proxies regarding innovation strategies and GSSCM practices towards corporate transformation towards GS-OBM: (1) Circular economy (CE), (2) Research and development intensity (RDI), (3) Property plant and Equipment Growth (PPEG), (4) Capital expenditure (CAPEX), (5) and Firm age (AGE).
Source: Authors' own creation

summarised in Table 3.

'We've stepped up our investments in science and technology to strengthen the quality and efficacy of our products'. (CEO, U, AR, p.15)

Customer loyalty and the demand for customising and optimising products and processes have become more pronounced (Kumar et al., 2022).

Successful innovation strategies for the GS-OBM require industry sector experience, Industry 4.0, technology adoption, strategic and operating cash flows, partnerships with suppliers, and effective engagement with customers and other stakeholders across the sustainable value chain, as Table 3 reports. This includes challenging the conventional industry norms and replacing existing processes and technologies with green innovations and GSSCM practices as articulated by the following extract;

The materials used in current products may not be the preferred choice in the future if they cannot establish environmental, social, and governance (ESG) credentials or develop strong circular solutions. This starts with transparency and includes our suppliers, operations, and customers. (RT, AR, p107,2021)

Corporate transformation requires internal and external R&D investment. Both internal and external R&D activities represent a high percentage (65 %) of investment expenditure on innovation trajectories, as illustrated in Fig. 4.

The next section outlines the results of our empirical analysis of FTSE companies for the period 2012–2021 and investigates the interdependencies between key pillars empowering corporate transformation towards GS-OBM and ESG performance.

## 4.2. Interdependencies and complementarities between the key pillars empowering GS-OBM and ESG performance

We incorporate five proxies as essential factors empowering corporate transformation towards GS-OBM: (1) circular economy practices (CE), (2) research and development intensity (RDI), property plant and equipment growth (upgrading) (PPEG), and (4) capital expenditures

(CAPEX) and company (Age). The correlation matrix in Table 4 reveals that the correlation coefficients were significant. The composites of these five proxies were examined using a principal component analysis (PCA), as shown in Table 5. This helps to reduce dimensionality and improve interpretability. The overall measure of sampling, Kaiser-Meyer-Olkin (KMO), was 0.78, which exceeded the acceptable PCA threshold of 0.50. We conducted a principal component analysis (PCA) to formulate a composite measure for the five crucial proxies that underpin corporate transformation towards GS-OBM, which reduces the dimensionality of the datasets and improves their interpretability. The overall Kaiser-Meyer-Olkin (KMO) measure of sampling adequacy was 0.781, which is above the recommended PCA threshold of 0.50.

The descriptive statistics of the proxies used in this study are presented in Table 6.

### 4.2.1. The mediating influence of Industry 4.0 technology adoption on the relationship between innovation strategies and GSSCM practices for GS-OBM and ESG performance

Table 7 provides the regression analysis results and the positive relationship between Industry 4.0 technology adoption, innovation strategies, and GSSCM practices for GS-OBM and ESG performance. This confirms H1.

#### 4.2.1.1. The mediating impact of governance mechanisms on the relationship between innovation strategies and GSSCM practices towards GS-OBM and ESG performance.
Using principal component analysis, we captured governance mechanisms by combining various indicators relevant to internal and external governance mechanisms. The combined indicators of governance mechanisms include board independence, SDGs, CSR committees, gender diversity, and audit committee independence. The regression analysis results for H2 are presented in Table 8. The results reveal a positive relationship between governance mechanisms, innovation strategies, and GSSCM practices and CG-OBM and sustainable performance. Table 8 indicates the mediating impact of governance mechanisms on the nexus between innovation strategies and GSSCM practices for CG-OBM and sustainable performance.

Companies' absorptive capabilities enable boards to capture issues of regulation and standard-setting requirements, including customer needs, and thus customise products and services to respond to changing customer demands (Blesa and Ripollés, 2021). Green innovation strategies, GSSCM practices, and corporate transformation towards GS-OBM are all shaped by the corporate governance structure, including strategic investment option appraisals based on relevant assumptions and scenarios, including environmental considerations, as pre-decision control mechanisms before a financial investment decision is made, as articulated by the following extracts from corporate disclosure:

> 'The board assesses capital allocation across the bp portfolio, including the level and mix of capital expenditures and divestments, strategic acquisitions.' (BP, AR, p.32)

> 'For all investment cases, we consider whether the investment case supports delivery of our strategy to become an integrated energy company and our net zero aims'. (BP, AR, p.34)

<table><caption>**Table 5**
PCA (Eigenvectors) and diagnostics of the proposed proxies.</caption><thead><tr><th>Proxies</th><th>COMP-1</th><th>COMP-2</th><th>COMP-3</th><th>COMP-4</th><th>COMP-5</th><th>Unexplained,</th><th>(KMO)</th></tr></thead><tbody><tr><td>(1) CE</td><td>0.418</td><td>0.017</td><td>0.959</td><td>0.034</td><td>0.174</td><td>0.042</td><td>0.968</td></tr><tr><td>(2) RDI</td><td>0.407</td><td>0.953</td><td>0.074</td><td>0.163</td><td>0.015</td><td>0.041</td><td>0.99</td></tr><tr><td>(3) PPEG</td><td>0.546</td><td>0.065</td><td>0.173</td><td>0.309</td><td>0.934</td><td>0.121</td><td>1.001</td></tr><tr><td>(4) CAPEX</td><td>0.422</td><td>0.311</td><td>0.103</td><td>0.629</td><td>0.487</td><td>0.001</td><td>0.875</td></tr><tr><td>(5) AGE</td><td>0.497</td><td>-0.07</td><td>0.091</td><td>0.12</td><td>0.166</td><td>0.065</td><td>0.944</td></tr><tr><td>Eigenvalue</td><td>6.019</td><td>1.258</td><td>1.215</td><td>0.99</td><td>0.933</td><td>-</td><td>-</td></tr><tr><td>Proportion</td><td>0.857</td><td>0.063</td><td>0.056</td><td>0.019</td><td>0.009</td><td>-</td><td>-</td></tr><tr><td>(KMO)</td><td>-</td><td>-</td><td>-</td><td>-</td><td>-</td><td>-</td><td>0.78</td></tr></tbody></table>

Source: Authors' own creation
<table><caption>**Table 6**

Descriptive statistics.</caption><thead><tr><th>Variable</th><th>Obs</th><th>Mean</th><th>Std. Dev.</th><th>Min</th><th>Max</th></tr></thead><tbody><tr><td>CE</td><td>1580</td><td>16419.99</td><td>68630.143</td><td>1686</td><td>615,937</td></tr><tr><td>RDI</td><td>1580</td><td>10.197</td><td>100.157</td><td>0</td><td>2827.3</td></tr><tr><td>PPEG</td><td>1580</td><td>26624.3</td><td>130,850</td><td>0</td><td>2.2388</td></tr><tr><td>CAPEX</td><td>1580</td><td>2868.45</td><td>16579.1</td><td>0</td><td>426,962</td></tr><tr><td>AGE</td><td>1580</td><td>13.874</td><td>1.876</td><td>3.912</td><td>21.504</td></tr><tr><td>ROA</td><td>1580</td><td>8.201</td><td>15.091</td><td>-85.15</td><td>269.11</td></tr><tr><td>ESG performance</td><td>1580</td><td>50.66</td><td>19.006</td><td>0.99</td><td>94.35</td></tr><tr><td>TobinQ</td><td>1580</td><td>3.553</td><td>49.292</td><td>21.51</td><td>269.79</td></tr><tr><td>Board Size</td><td>1580</td><td>8.6</td><td>2.582</td><td>1</td><td>22</td></tr><tr><td>Independent Board</td><td>1580</td><td>63.395</td><td>17.644</td><td>0</td><td>100</td></tr><tr><td>Audit committee</td><td>1580</td><td>73.525</td><td>14.255</td><td>0</td><td>100</td></tr><tr><td>Board Diversity</td><td>1580</td><td>23.984</td><td>12.376</td><td>0</td><td>66.67</td></tr><tr><td>CSR committee</td><td>1580</td><td>8.582</td><td>4.095</td><td>0</td><td>1</td></tr></tbody></table>

Source: Authors' own creation

'We will look for new options and innovative ways of bringing projects on stream faster, but we will only do this in line with our ESG standards'. (CEO, RT, AR, p.13, 2021)

Companies' boards of directors are pivotal in leading decarbonisation strategies by investing in green servitisation innovation, Industry 4.0 technology adoption, and successful GSSCM practices for GS-OBM and CSP.

**4.2.1.2. The combined impact of Industry 4.0 technology adoption and governance mechanisms on innovation strategies and GSSCM practices towards corporate transformation for GS-OBM and ESG performance.** The regression analysis results reveal a positive association between Industry 4.0 technology adoption, governance mechanisms, innovation strategies, GSSCM practices for GS-OBM and CSP. The results in Table 9 illustrate the integrated mediating influence of Industry 4.0 technology adoption, and corporate governance mechanisms on the relationship between innovation strategies and GSSCM practices for GS-OBM and ESG performance (H3).

### 4.3. Maximising sustainable performance through corporate transformation towards GS-OBM and ESG performance

Amalgamating servitisation innovation with GSSCM practices strengthens companies' ability to cope with climate-related risks and empowers corporate transformation into GS-OBM. Successful green servitisation innovation requires engagement with stakeholders, Industry 4.0 technology adoption, international networks, and powerful mechanisms to maintain long-term relationships with customers and partners across the supply chain based on a win-win strategy. It is also important to point out that country culture, laws, and effective due diligence in supply chains are important for successful GSSCM practices.

<table><caption>**Table 7**

The impact of Industry 4.0 technologies on the relationship between innovation strategies and GSSCM practices towards companies' sustainable performance.</caption><thead><tr><th>VARIABLES</th><th>(1)<br>ESG_per</th><th>(2)<br>ROA</th><th>(3)<br>TobinQ</th></tr></thead><tbody><tr><td>c.GSSCM#C.I.40</td><td>9.046***<br>(1.016)</td><td>1.246**<br>(5.227)</td><td>2.607***<br>(3.797)</td></tr><tr><td>Controls</td><td>Yes</td><td>Yes</td><td>Yes</td></tr><tr><td>Year Fixed</td><td>Yes</td><td>Yes</td><td>Yes</td></tr><tr><td>Industry Fixed</td><td>Yes</td><td>Yes</td><td>Yes</td></tr><tr><td>Constant</td><td>53.79***<br>(0.729)</td><td>6.880***<br>(0.341)</td><td>3.223***<br>(0.253)</td></tr><tr><td>Observations</td><td>1541</td><td>1541</td><td>1541</td></tr><tr><td>R-squared</td><td>0.429</td><td>0.281</td><td>0.275</td></tr></tbody></table>

Standard error in parentheses.
*** p < 0.01 ** p < 0.05 * p < 0.1.

Source: Authors' own creation

<table><caption>**Table 8**

The influence of governance mechanisms/structure on nexus between innovation strategies and GSSCM practices towards corporate transformation to GS-OBM and CSP.</caption><thead><tr><th>The governance</th><th>(1)</th><th>(2)</th><th>(3)</th></tr><tr><th>VARIABLES</th><th>ESG_per</th><th>ROA</th><th>TobinQ</th></tr></thead><tbody><tr><td>c.GSSCM#C.GOVMs</td><td>1.688***<br>(0.598)</td><td>0.332**<br>(0.271)</td><td>0.139**<br>(0.227)</td></tr><tr><td>Control.</td><td>(Yes)</td><td>(YES)</td><td>(YES)</td></tr><tr><td>Year-Fixed</td><td>(Yes)</td><td>(YES)</td><td>(YES)</td></tr><tr><td>Industry Fixed</td><td>(Yes)</td><td>(YES)</td><td>(YES)</td></tr><tr><td>Constant</td><td>55.27***<br>(0.780)</td><td>6.666***<br>(0.353)</td><td>3.148***<br>(0.300)</td></tr><tr><td>Firm-year observations</td><td>1537</td><td>1537</td><td>1537</td></tr><tr><td>R. Squared</td><td>0.31</td><td>0.22</td><td>0.20</td></tr></tbody></table>

Standard error in parentheses.
*** p < 0.01 ** p < 0.05 * p < 0.1.

Source: Authors' own creation

Corporate transformation towards GS-OBM incorporate key GSSCM related-practices as depicted in Fig. 5.

Servitisation reflects the level of product-service innovation, encompassing various technology-enabled corporate business models that maintain a competitive edge through the emphasis on customer-centric services throughout the entire product life cycle. Manufacturing companies implementing integrated product solutions through in-house development make a long-term commitment to their projects and focus on enhancing their resource bases and strategic agility. Agility can be viewed as a prerequisite for digital organisational transformation (Bustinza et al., 2018).

Parida and Jovanovic (2022) examine how global manufacturers offer advanced services, such as outcome-oriented contacts, to global customers. They argue that offering advanced services requires board-rooms to engage in win-win collaboration strategies with diverse service network partners. Manufacturing companies strive to successfully implement servitisation-centric business models because service contracts guarantee regular recurring revenue from the customer base (Kohtamäki et al., 2020). Narrative extracts from companies' annual reports shed light on boardroom dynamic capabilities rooted in the knowledge and experience of their industry.

Manufacturing companies, such as RR, seek to strengthen ESG performance and generate additional revenue through the GS-OBM. RR earns additional revenue by delivering outcome-based services to customers. Narrative extracts from the Rolls-Royce annual report (2021) reveal that subsidiaries emphasise product and service innovation, including the expansion of their service and product of low-emission and servitisation innovation through internal and external R&D and other pillars of innovation trajectories. In 2021, the Civil Aerospace business generated £4,536 million in revenue (64% from services and 36% from original equipment (O-E)). In 2022, it will generate a revenue of 5,886 million (65% services: 35% O-E). A new RR initiative focuses on creating opportunities resulting from net-zero transition, which generates £2m revenue from services in 2021. In 2022, the leading provider of sustainable, climate-friendly solutions, generates 3,660 of revenue (55% generated from services). The following extracts from the RR annual report (2021–2022) show evidence of the interdependencies and complementarities of the key pillars of corporate transformation towards GS-OBM:

> "...we make investment choices to improve quality, delivery, durability of its existing products and services and to develop new technologies and service offering"

> "We must remain focused on our services strategy, ... extending the life of our products in service also means enabling our customers to use them in a way that is compatible with net zero"
<caption>**Table 9**</caption>

The combined impact of I4.0 technologies and governance mechanisms on the relationship between innovation strategies and GSSCM practices towards GS-OBM and CSP.

<table><thead><tr><th></th><th>(1)</th><th>(2)</th><th>(3)</th></tr></thead><tbody><tr><td>VARIABLES</td><td>ESG_per</td><td>ROA</td><td>TobinQ</td></tr><tr><td>c.GSSCM#c.I4_GOVMs</td><td>9.026***<br>(1.016)</td><td>1.1706**<br>(4.867)</td><td>2.547***<br>(4.097)</td></tr><tr><td>Controls</td><td>Yes</td><td>Yes</td><td>Yes</td></tr><tr><td>Year Fixed</td><td>Yes</td><td>Yes</td><td>Yes</td></tr><tr><td>Industry Fixed</td><td>Yes</td><td>Yes</td><td>Yes</td></tr><tr><td>Constant</td><td>53.88***<br>(0.733)</td><td>6.869***<br>(0.352)</td><td>3.207***<br>(0.300)</td></tr><tr><td>Firm-year observations</td><td>1537</td><td>1537</td><td>1537</td></tr><tr><td>R. Squared</td><td>0.255</td><td>0.176</td><td>0.164</td></tr></tbody></table>

Standard error in parentheses.

*** p < 0.01 ** p < 0.05 * p < 0.1.

Source: Authors' own creation

"We continued to invest prudently in new technologies, product and services" "Building long-term relationships with our customers through service packages".

"Our innovation is also taking us into exciting new area, with novel technologies opening up new markets and significant growth opportunity".

Green servitisation innovation strategies enable companies to engage in various trajectories across the value chain and allow them to serve various market, generate additional revenue, and add value to customers. Davies et al. (2023), amongst earlier studies, explore the relevance of supply chains and ecosystems to servitisation strategies. As illustrated in Fig. 6, RR generates revenue through servitisation over the period (2017–2023) with an emphasis on supply chain analysis, as shown in Fig. 7. The revenue generated from aftermarket services has been greater than that generated from selling products.

Companies invest in Industry 4.0 technologies to improve their competitive positions. Furthermore, companies' past experiences and knowledge influence their transformation to the GS-OBM. Through

<figure><img src="image_9.png" /><figcaption>**Fig. 5.** Key GSSCM related practices toward GS-OBM. Sources: Author Own Creation.</figcaption></figure>

<figure><img src="image_10.png" /><figcaption>**Fig. 6.** RR-Revenue from servitisation (Millions £).</figcaption></figure>
<figure><img src="image_11.png" /><figcaption>Fig. 7. RR-Supply chain indicators including ESG performance as calculated by 6th March 2024. Source: Authors' own creation.</figcaption></figure>

digitalisation, companies can achieve effective control and coordination between processes or create additional customer value by enhancing their experiences and understanding customer preferences. The digital capabilities of products and services are embedded in the company relationships. Yang et al. (2023) indicate that servitisation partially mediates the relationship between digitalisation and companies' financial performance. For advanced services, strong network capabilities increase the indirect effect of digitalisation on performance. A higher level of organisational risk-taking tolerance enhances the indirect effect of digitalisation on company performance.

Industry 4.0 technologies enable companies to transform their conventional product-oriented operations into digitalised service-oriented operations (digital servitisation). Successful servitisation is contingent on the successful alignment of stakeholders through effective GSSCM practices that integrate distributors and other partner companies specialising in knowledge-based resources within collaborative ecosystems (Khanra et al., 2021). In internationalized knowledge-intensive business scenarios, cross-border collaborations and international collaborative alliances are strategic solutions to increase product-service innovation (Vendrell-Herrero et al., 2017).

## 5. Conclusion

This study sheds light on the key pillars that reinforce corporate transformation towards GS-OBM and ESG performance. It investigates the interdependencies between green servitisation innovation, GSSCM practices, Industry 4.0 technology adoption, corporate governance structures, and ESG performance. Findings of this study shows Industry 4.0 technology adoption strengthens the relationship between green innovation strategies, GSSCM practices and ESG performance (H1). Corporate governance mechanisms have mediating impact on these relationships (H2). Further, the combined impact of Industry 4.0 technology adoption and governance mechanisms strengthen the relationship between green innovation strategies, GSSCM towards GS-OBM and ESG performance (H3).

Corporate transformation towards GS-OBM in UK companies is rooted in the synergistic effects of servitisation, GSSCM, Industry 4.0 technology adoption, and governance structure. Servitisation innovation strategies have substantial potential for strengthening ESG and corporate financial performance. Green servitisation innovation strategies require active engagement at various levels across the value chain.

Green servitisation innovation strategies allow companies to serve various market, generate additional revenue, increase customer satisfaction, and add value across the supply chain and entire ecosystem. Our study reveals that boardrooms' strategic choices regarding business innovation strategies and GSSCM practices for GS-OBM and ESG performance are shaped explicitly by a country-specific governance structure. Boardrooms engage in pragmatic green solutions for several reasons, including environmental legislation, policies, regulatory body requirements, the personal values of board members, institutional pressures, and market competitiveness. Findings of this study are consistent with those of Song et al. (2022) and Bustinza et al. (2024).

### 5.1. Theoretical implications

The findings of this study are consistent with the theoretical lenses underpinning RBT: the survival of innovative firms depends on internal organisational development and external sources to thrive over time. When understood and broken down, absorptive, adaptive, and innovative capabilities have positive and direct impacts on sustainable supply chain management practices and ecosystems (see Fait et al., 2024). Investments in Industry 4.0 technologies and other tangible and intangible assets accelerate green servitisation innovation trajectories. Industry 4.0 technologies amalgamate green servitisation innovation strategies with GSSCM practices, accelerate corporate transformation towards GS-OBM, and strengthen ESG performance. Our study contributes to the extant literature by extending the findings of more recent studies by Song et al. (2022) and Kumar et al. (2024) by further exploring the interdependencies between green sustainable supply chain management, green business innovation strategies, Industry 4.0 technologies, and governance structure, and their combined impact on GS-OBM and ESG performance. To the best of our knowledge, this study is among the first to offer a holistic view of these domains' interdependencies and their combined impact on GS-OBM and ESG performance. This adds to the extant literature through more recent evidence on business innovation strategies in the UK. The findings of this study contribute to the RBT through a holistic perspective of the contextual factors surrounding the current practices of corporate transformation towards GS-OBM and CSP maximisation.
## 5.2. Managerial implications

The findings of this study have managerial implications and can serve as a reference or benchmarking paradigm for decision makers in different contexts and settings. Decision makers need to consider the influence of the interdependencies between these key pillars and the complementarity between various innovation trajectories rather than merely implementing one innovation trajectory. Industry 4.0 technology adoption facilitates and amalgamates synergic innovation trajectories and accelerates corporate transformation towards GS-OBM. This study reveals that radical innovation strategies are empowered by Industry 4.0 technology adoption and internal and external governance structures. Radical innovation strategies that incorporate various innovation trajectories help companies accelerate and fuel GSSCM practices and corporate transformation towards GS-OBM. Corporate transformation towards GS-OBM and ESG performance can be viewed as strategic choices associated with investment decisions that require resources. Corporate transformation towards GS-OBM and ESG performance is rooted in radical green servitisation innovation trajectories, effective governance structures, and the integration of green servitisation innovation trajectories into GSSCM strategies. Industry 4.0 technology adoption facilitates and influences the depth and breadth of such integration.

Extracts from companies' narrative disclosures have implications for managers regarding the various practical scenarios of how corporate transformation towards GS-OBM also depends on internal and external resources, including partners, and collaborative activities with wider stakeholders. To achieve successful outcomes of corporate transformation towards GS-OBM and sustainable ESG performance, human capital managers should invest in knowledge sharing, conduct knowledge audits, and prompt interactional justice between managers and subordinates. Policymakers and regulatory bodies should implement appropriate measures to prevent national human capital depletion, promote national core values, and invest in innovative employee efficiency strategies (see Serenko, 2024). To achieve successful transformation towards the GS-OBM and ESG performance, boardrooms in different contexts and settings should consider the influence of high-involvement work systems on shaping power and knowledge sharing. This includes appropriate mechanisms for sharing information and knowledge exchange, appropriate types of rewards that stimulate employees' engagement and motivation, and the knowledge required to fulfil employees' responsibilities effectively (see Nguyen et al., 2024). The concept of knowledge hiding contradicts knowledge hoarding and sharing. Al Hawaii (2023) sheds light on the mediating role of employees' self-efficacy and trust in their leaders in mitigating their knowledge-hiding behaviour through humble leadership.

## 5.3. Limitations and direction for future research

The main potential limitation of this study is its focus on FTSE companies in the quantitative analysis, which could affect the generalisability of the findings. Although we adopted a mixed approach-oriented research paradigm, our study has several limitations. We offer three perspectives on the UK's business innovation strategies: the macro, meso, and micro levels. By adopting or adapting the methodology used in this study, future research could explore the interdependencies of these domains in other contexts and settings. Future research could examine the interdependencies of the domains underlying this study or adapt them and their impact on the GS-OBM using a case study approach. Future research may employ other theoretical lenses, such as new institutional theory, upper echelons theory, or industrial marketing. Future research may adopt survey-based questionnaires to examine the influence of green innovation trajectories, GSSCM practices, and industry technologies, and their impact on corporate transformation towards GS-OBM with specific industrial groups. Finally, future studies could adopt quantitative or qualitative research

paradigms or mixed-method approaches to examine barriers associated with corporate transformation towards GS-OBM in different contexts and settings or within the same country across sectors, including the health, education, transportation, service, and manufacturing sectors, both in public and private organisations.

### CRediT authorship contribution statement

**Fadi Alkaraan:** Writing – original draft, Visualization, Project administration, Methodology, Investigation, Formal analysis, Data curation, Conceptualization. **Mahmoud Elmarzouky:** Validation, Software, Data curation. **Ana Beatriz Lopes de Sousa Jabbour:** Writing – review & editing, Supervision, Project administration, Methodology, Investigation, Formal analysis, Conceptualization. **Charbel Jose Chiappetta Jabbour:** Supervision, Methodology, Conceptualization. **Nadia Gulko:** Writing – review & editing, Resources.

### Declaration of competing interest

The authors declare that they have no known competing financial interests or personal relationships that could have appeared to influence the work reported in this paper.

### Acknowledgements

We are very grateful to the anonymous referees and the editors for their constructive comments and insightful suggestions on our manuscript.

#### Data Availability Statement.

The data that support the findings of this study are available from the.

corresponding author upon reasonable request

#### Data availability

Data will be made available on request.

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Fadi Alkaraan is Associate Professor of Accounting, Governance & Sustainability at University of Lincoln (UK). Fadi has been appointed Visiting Professor EM Normandie Business School (Dubai) 2023–2024. Affiliate Professor at Gulf Finance Centre, Gulf University for Science & Technology, Kuwait (2023–2024), Affiliate Professor at the Institute of Management Technology (IMT) Dubai, UAE (2022–2023), Affiliate Professor (2020) at Jinan University (Lebanon), Affiliate PhD /DBA supervisor at Gloucestershire University (2020-to date). Fadi promoted to Associate Professor of Accounting and Finance at Aleppo University (2012) and Professor of Accounting and Finance at Jinan University (Lebanon) (2020). Fadi is Certified Global Business Analyst, and Certified Management Accountant (Institute of Certified Management Accountants, Australia and New Zealand). Fadi is FAIA, Fellow of the Association of International Accountants (AIA), a global membership body for professional accountants. He is a Senior Fellow of the Higher Education Academy and a member of British Accounting and Finance Association (BAFA). He received his PhD in Accounting and Finance from Manchester Business School (MBS) in 2005. Fadi held various teaching and research positions at Business Schools including University of Manchester (UK); Cork University Business School (Ireland), Abu Dhabi University and United Arab Emirates University (UAE). His research interests focus on governance, sustainability and business model transformation in large UK companies towards eco-systems, ESG, SDGs, CSR, innovation strategies and companies’ dynamic capabilities, green sustainable strategic investment decision-making, investment appraisal techniques, and corporate governance mechanisms. Fadi published his research widely including 3\*ABS journals.

Mahmoud Elmarzouky is a Senior Lecturer in Accounting at University of St Andrews. Reviewer of various academic journals such as the International Journal of Finance and Economics, International Journal of Emerging Markets, Journal of Accounting, Auditing and Performance Evaluation, Journal of financial reporting and accounting and the
European Journal of Management and Business Economics. I have also contributed as a reviewer for the EURAM 2020 (European Academy of Management) Conference. American Accounting Association 2020 Ohio Regional Meeting.

**Ana Beatriz Lopes de Sousa Jabbour** is currently a Professor of Supply Chain Management for Sustainable Development at EM Normandie Business School – Paris Campus, France. She has been also an affiliate Professor as University of Lincoln (UK). Her research explores contemporary pressing issues related to sustainability in supply chains, circular economy, and the nexus between sustainability and digital technologies. She has been recognized as a highly cited researcher since 2022 by Clarivate. She has also been included in Stanford University's ranking of the 2% most cited scientists globally since 2020. She has developed an international career path, working in HEI across multi-cultural environments including England, Scotland, France and Brazil. She frequently publishes research articles in first-tier scientific journals, including outlets at the top of importance rankings, such as the prestigious Financial Times Global 50 journals (FT50), the UK Chartered Association of Business Schools (CABS), and the French FNEGE ranking.

**Charbel Jose Chiappetta Jabbour** is a Professor of Green, Circular, and Responsible Supply Chains at NEOMA Business School, France, Head of the Information Systems, Supply Chain Management & Decision Support Department. He has been Affiliate Global Professor in Sustainable Operations & Supply Chain Management, University of Lincoln (UK). He is one of dozens of French-based scholars to have been included in the prestigious Clarivate/Web of Science Highly Cited Researcher awards due to having multiple articles

ranked among the top 1% of most cited papers globally. His international career includes both teaching and research in Latin America (Brazil), Asia (Japan), and Europe (Scotland, England, and France). He has published articles in numerous top-tier journals according to a wide range of rankings. In 2019, he received a British Academy of Management best paper award in Responsible Management (BAM Conference). He has been an Associate Editor at the Journal of Cleaner Production. He was one of the youngest academics in the history of the University of Sao Paulo (USP) to receive Habilitation in Management. He has served as PI/Co-I of a number of large-scale externally funded research projects, including Innovate UK, Midlands Engine UK, and FAPESP. He has supervised dozens of early-career researchers, both PhDs and post-docs. Charbel Jose is passionate about the application of the latest research in his teaching in the pursuit of creating more responsible future business leaders.

**Nadia Gulko** Nadia is Associate Professor of Accounting at University of Lincoln (UK) and Extraordinary Visiting Associate Professor at North-West University, (South Africa). She is a Senior Fellow of the HEA, qualified with CIMA, Nadia is a Member of the European Accounting Association (EAA) and the British Accounting and Finance Association (BAFA). Nadia's research focuses on CSR reporting, corporate board diversity, and environmental management accounting. She is also interested in Accounting Education research on learning experiences of international students, teaching excellence in higher education, and data analytics. She holds a PhD in Accounting from the University of Lincoln.