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Despite the rising interest in eco-innovation, few studies have examined how open innovation (OI) actually increases eco-innovation performance. Drawing on capabilities theory, this study aims to investigate how two specific organizational capabilities (alliance management capability and absorptive capacity) individually complement OI strategies (inbound and outbound) to increase eco-innovation performance, while taking into consideration high and low levels of environmental uncertainty.

To test the hypotheses, the authors used a primary survey and secondary proxy data sources from 232 Taiwan-based manufacturing firms. The authors collected survey data for measuring OI strategies, followed by secondary proxy data for measuring alliance management capability, absorptive capacity, environmental uncertainty and eco-innovation performance.

The results indicate that in highly dynamic environments, alliance management capability complements inbound/outbound strategies to increase eco-innovation performance. However, absorptive capacity complements only inbound strategies, not outbound strategies.

These findings have important implications for managers attempting to increase eco-innovation performance by using OI in dynamic environments.

The findings provide new evidence that configurations of OI alone are not enough for increasing eco-innovation performance. Instead, firms’ eco-innovation benefits more when OI are complemented by alliance management capability.

This study makes an original contribution to the eco-innovation literature by demonstrating how organizational capabilities complement OI to increase eco-innovation performance in dynamic environments.