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.