Does Eco‐Innovation Reinforce Better Waste Management? The Role of Industry Sensitivity and Environmental Policy Frameworks

ABSTRACT Environmental sustainability is a critical global concern, and waste generation poses a major threat to ecological balance. We investigate eco‐innovation's role in enhancing waste management practices via the natural‐resource‐based view and dynamic capability perspective. While eco‐innovation is recognized as a key strategy for sustainability, empirical evidence on its direct impact on firm‐level waste management performance remains limited, creating a critical research gap. Using a dataset of publicly listed firms from 42 countries, covering 17,339 firm‐year observations from 2002 to 2019, we find a positive and significant relationship between eco‐innovation and waste management performance. This relationship is especially pronounced in environmentally sensitive industries, firms with formal waste reduction policies, and countries with stringent environmental regulations. By integrating two strategic management frameworks, this study deepens theoretical understanding while extending empirical evidence across a broad geographical and temporal scope. Our study thus addresses a key literature gap by providing large‐scale, cross‐country evidence that positions eco‐innovation as a dynamic capability directly relevant to waste management. Our findings highlight the value of eco‐innovation as a dynamic capability that supports firms in more effectively addressing environmental challenges. There are key implications for managers, policymakers, and scholars, given eco‐innovation's key role in supporting sustainable development and several United Nations Sustainable Development Goals.