Eco‐innovation for circular economy and sustainability performance: Insights and evidence from manufacturing firms

Abstract Despite progress in the literature in understanding the relationships between barriers, drivers, and features of eco‐innovations (EIs) to promote the circular economy (CE) and improve companies' sustainability results, the evidence remains limited and diffuse. To address this gap, we investigate the effect of barriers, sources of information, and features of innovations and EIs on manufacturing companies' CE and sustainability performance. This longitudinal study used official Colombian government data from 3144 manufacturing companies (2015–2020), considering partial least squares structural equation modeling. Our results reveal that developing or adopting (eco‐) innovations with incremental features could cause a blockage in implementing high‐level CE and in improving their overall sustainability performance. Similarly, radical (eco‐) innovations need more evidence to clarify their impacts on CE and sustainability. Finally, we show that the improvement in environmental and CE performance attributed to (eco‐) innovations has a significant and positive impact on the company's economics.