Mapping Patents to the SDGs: The Relationship Between Sustainable Innovation and Financial Performance Under Varying Digitalization Strategy
Year: 2026
Type: article
Abstract: This study investigates the relationship between sustainable innovation and financial performance among listed industrial firms, with digitalization strategy examined as a moderating factor. Sustainable innovation is measured through machine learning-based text mining on USPTO patent documents, identifying patents aligned with the 17 United Nations Sustainable Development Goals (SDGs). A Latent Dirichlet Allocation (LDA) model, an unsupervised machine learning technique, is applied to extract latent topics from patent abstracts and map them to the 169 SDG targets, enabling firm-level assessment of sustainability-related innovation. Drawing on a panel dataset, we find that stronger alignment between patent activity and the SDGs is positively associated with financial performance. Digitalization strategy is assessed through the frequency of digital-related keywords in firms’ 10-K reports. Contrary to theoretical expectations, the positive association between sustainable innovation and performance becomes significantly weaker at higher levels of digitalization strategy. These findings highlight the importance of sustainable innovation and a trade-off between digital advancement and sustainability-driven innovation returns. The study contributes to the innovation and sustainability literature and offers practical implications for firms seeking to align innovation strategy with sustainability and digital transformation goals.
Source: Sustainability
DOI: 10.3390/su18178797
Authors: Leyi Shi, Mu Yang, Chunjia Han
Institutions: University of London, Birkbeck, University of London
Language: English
Subfield: Management of Technology and Innovation
Domain: Social Sciences
Open Access status: gold
Estimated APC paid: $2,896
OpenAlex ID: W7204481376