ABSTRACT This study reveals five critical areas that Brazil's sugarcane‐based ethanol industry could capitalize on to incorporate sustainability into their firms' strategies. The emergent theoretical framework represents a starting point for further investigations aimed at integrating the sustainability construct and strategies for the industry. A growing body of literature calls for strategic management to adapt to complex and ever‐changing environments and sustainability trends. For many firms in developing economies, sustainability remains isolated from mainstream strategy, resulting in reactive approaches on the part of management. A qualitative research method – grounded theory – was used to induct from data. Five themes emerged from the analysis providing guidance on where sustainability‐related strategies ought to begin. This research posits that existing sectoral innovation systems could be used to channel sustainability‐driven innovations. In addition, a combination of public and private efforts to foster innovations based on the emergent themes could increase the value of industry under study, while lessening its social and environmental footprint. Copyright © 2012 John Wiley & Sons, Ltd and ERP Environment.
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