Headline: Transformation strategies connected to carbon capture and utilization: A cross-sectoral configurational study

Firms from various industries are investing in carbon capture and utilization (CCU) technologies as part of their circular economy efforts. Hence, managers and policy makers need to develop strategies to create value and “win” sustainability transformations. This study investigates how CCU innovations are connected to economic progress at the firm and industry levels. First, we characterize economic progress from sustainability innovations as a spectrum of combinations of transformation and growth targets, and derive a configurational perspective for such innovations. Consequently, through an empirical study based on 25 in-depth expert interviews with corporate innovation managers, triangulated via additional quantitative and qualitative data, we investigate the causal configurations of R&D activities in CCU that are expected to lead to economic progress, using a fuzzy set qualitative comparative analysis. Our results show a hierarchy of transformation strategies based on investments and value creation which may support policy makers in deciding on appropriate support mechanisms. To enable the emergence of more profitable CCU solutions and facilitate their commercialization, regulators should adapt existing policies to accommodate CCU and consider developing an integrated policy framework. Moreover, managers across industry should develop adaptive strategies for achieving value creation and progress from CCU within changing environments.