Eco-innovation and performance of SMEs in Ecuador

Purpose: This article presents a new approach to modeling the relationships of eco-innovation. The impact of eco-innovation on organizational performance is well known, but the opposite direction has not been explored. Design/methodology/approach: The research used an online questionnaire survey emailed to 100 Ecuadorian managers. Data obtained from the 62 respondents were analyzed through structural equation modeling. Findings: The results confirm that while eco-innovation increases company performance, higher performance is negatively related to eco-innovation, with managers preferring to dedicate company resources to projects with more significant benefits and lower outlay. Research limitations/implications: This study was conducted in one country, so generalizability may be limited. Moreover, the cross-sectional data prevent inferences of causality. Practical implications: Eco-innovation activities are important to managers and can help them with a new definition of company strategy. The findings confirm that eco-innovation drives performance but not vice versa. It could be necessary to modify the strategy to create a sustainable business. Originality/value: The results elucidate both directions of the relationship between eco-innovation and performance, representing a new contribution to the literature. The results also confirm that eco-innovation activities are valuable tools in building and developing emerging economies.