Does open innovation and eco-innovation have a critical impact on Indian competitive advantage and financial performance?

Purpose The purpose of this paper is to investigate the direct and indirect impact of eco-innovation (EI) and open innovation (OI) on small and medium enterprises’ (SMEs) performance and competitive advantage (CA). Design/methodology/approach The population of this study consisted of Indian SMEs; a random sample was used to collect 186 responses by using the questionnaire method. The questionnaire was distributed to the top and middle-level managers in Bangalore city and rural areas; this paper used SMART-PLS to explore the relationship between the study variables. Findings The results demonstrate that OI has a significant relationship with a CA. Furthermore, EI has a significant relationship with SMEs performance; in contrast, OI has an insignificant mediation effect on the relationship between innovation culture and SMEs performance. While organizational capability has a mediation effect on the relationship between EI and SME performance. Moreover, environmental ordination has a positive moderator role on the relationship between EI and SME performance. Originality/value This study provides a critical theoretical and practical contribution of EI and OI on business performance and sustainable CA.