Eco-Innovation as a path to employment: the role of strategy, institutions, and higher education

In the face of growing environmental and socio-economic challenges, eco-innovation (EI) has become a strategic imperative for firms aiming to reconcile sustainability and competitiveness. While previous studies have provided empirical evidence on the economic or environmental outcomes of EI, its implications for employment remain ambiguous. This paper investigates how different motivations for EI—ranging from reactive based on regulatory compliance, to proactive innovation driven by R&D—affect job creation. Using firm-level data from the Spanish PITEC survey, I assess the impact of institutional drivers and internal capabilities—specifically, the role of highly educated R&D personnel—on the deployment of EI and subsequent employment outcomes. Results show that voluntary and especially R&D-based EI strategies boost employment, while reactive strategies have no effect. Moreover, the higher education levels of R&D employees not only foster the effectiveness of voluntary EI strategies but also discourage reliance on compliance-based approaches. Lastly, institutional pressure is found to have a positive direct effect on EI strategies based on R&D and efficiency.