Revealing the Incrementalism Trap in Corporate Sustainability: The Impact of Conflicting Stakeholder Expectations in Incumbent and Startup Companies

Abstract Stakeholder engagement has become established as pivotal in corporate sustainability. Literature on stakeholder engagement in corporate sustainability has a strong grounding in normative ethics. An issue that has received less attention in this scholarship is context-sensitive responses to tensions stemming from conflicting stakeholder interests in corporate sustainability. Drawing on 65 interviews, we present an in-depth qualitative study of stakeholder tensions in both large incumbent corporations and sustainability-focussed startups actively pursuing corporate sustainability. We present a framework on the outcomes of stakeholder tensions in corporate sustainability, illustrating a potential incrementalism trap in corporate sustainability, where normative and pragmatic stakeholder expectations drive tensions, ultimately limiting sustainability impact. The findings of our study advance theorising on normative ethics and pragmatism in stakeholder engagement in corporate sustainability by grounding ethical evaluation in real stakeholder engagement practice.