The impact of open innovation on municipal waste recycling rate and resource productivity in the European Union countries: The moderating role of environmental regulations

The waste crisis and pressure on natural resources call for innovative approaches to achieve circular economy objectives. Using panel data from 27 European Union countries (2010–2023), this study evaluates the effects of open innovation (OI) on the municipal waste recycling rate and resource productivity with respect to the moderating role of environmental regulations. By using principal component analysis (PCA) to construct comprehensive OI and econometric methods such as feasible generalized least squares (FGLS), dynamic generalized method of moments (GMM), and time fixed effects models, the findings reveal a U-shaped relationship between OI and environmental performance indicators, namely, the municipal waste recycling rate (OI = −4.628*** and OI² = 1.475***) and resource productivity (OI = −198.412** and OI² = 60.534**), where environmental regulations significantly reinforce this relationship. Through robustness tests, these results provide conclusive assertions that governments must simultaneously focus on developing OI and improving environmental regulatory frameworks to achieve sustainable development goals.