A Configurational Approach to Eco‐Innovation and Innovation Performance Relationship: Does Firm Size Matter?

ABSTRACT This research fills the gap identified in the extant literature regarding the relationship between eco‐innovation and innovation performance, employing the Fuzzy Set Qualitative Comparative Analysis (fsQCA) approach within the configuration theory framework. We analyze data from 2123 innovative manufacturing firms across eight European countries. The results highlight how the combination of product and process eco‐innovations, and the firm's internal and external knowledge sources, leads to high innovation performance. Configurations vary significantly with firm size. Small firms benefit from simultaneous engagement in product and process eco‐innovation when supported by innovation collaborations. Medium‐sized firms benefit from comprehensive investments in their internal knowledge base combined with eco‐innovations. Large firms benefit from product eco‐innovation combined with R&D investments. This research offers valuable insights into the application of eco‐innovation to achieve high innovation performance, providing eco‐innovation strategies for managers to focus on sustainable business practices.