In the face of intractable societal grand challenges, organizations increasingly resort
to responsible innovation –that
is, they pledge to create value for multiple stakeholders through
developing new products or services that avoid doing harm and improve conditions for people
and the planet. While the link between responsible innovation and societal improvements has
been established, organizations pursuing responsible innovation lack governance mechanisms
to guide the allocation of the value created –both
economic and social –among
heterogeneous
stakeholders, in line with their responsible intent. We combine the value-based
strategy and
stakeholder perspectives and infuse a deliberative process to design a three-stage
model of value
allocation that rests on three key organizational decisions: i) what value to create and for whom, ii)
how to appropriate the value created vis-à-
vis
unintended value appropriators, and iii) how to distribute
the value appropriated among intended stakeholders. We propose a framework of stakeholder
governance comprised of four novel mechanisms by which organizations can allocate value among
their multiple principal stakeholders as part of participative processes. Our study contributes to
responsible innovation and corporate governance research by unpacking how new value is managed
to solve societal grand challenges.