Abstract

Sustainable development has emerged as a crucial factor enhancing the competitiveness of small and medium enterprises (SMEs) in light of societal expectations and government regulations. Within this context, innovation assumes a significant role in this challenge, particularly for smaller companies facing greater obstacles in fostering innovation. These constraints have prompted both internal and external innovation initiatives, commonly referred to as open innovation. In this article, we scrutinize the influence of environmental practices on innovation endeavors, specifically examining whether the innovation strategy and its implementation facilitate the advancement of open innovation within SMEs. Furthermore, we explore the potential moderating effect of firm owners' gender on these relationships. The research model is validated using data from 543 companies in Ecuador, employing the partial least squares (PLS) method. The findings elucidate how environmental sustainability can promote the adoption of open innovation practices, with the innovation strategy and its implementation acting as mediators in this relationship. The impact of gender only manifests in the innovation strategy pertaining to environmental sustainability. In conclusion, open innovation stemming from the pivotal role of environmental sustainability emerges as a critical driver in augmenting innovation performance across various dimensions, such as quality, growth, efficiency, process enhancement, organizational practices, employee motivation, and acquisition of new product/service skills.