Factors driving national eco‐innovation: New routes to sustainable development

Each country has its own set of unique elements and institutions to foster innovation within its boundaries. This combination of elements and institutions is known as an innovation system. Innovation has been used to boost countries' growth and competitiveness for decades. However, it is a much questioned strategy because it may compromise the opportunities of future generations and thus sustainable development. Hence, academics and policymakers are now turning to eco‐innovation to create sustainability‐based innovation systems that improve not only a country's economic efficiency but also people's well‐being and quality of life. However, the uncertainty and complexity around eco‐innovation hinder the creation and implementation of eco‐innovation policies because of a failure to identify its drivers. The aim of this paper is to detect the national‐level factors that are necessary or sufficient for eco‐innovation in European countries. Fuzzy‐set qualitative comparative analysis (fsQCA) is used for this purpose. The conditions in this analysis are governance, human capital capacity, research institutions, and public and private research and development (R&D) investment. The use of fsQCA to study eco‐innovation systems is methodologically unique. The findings suggest that research institutions, human capital capacity, and public R&D investment are valuable for eco‐innovation. Therefore, the findings of this study have implications for the design of policies aimed at creating businesses, enriching society, and boosting sustainable development through eco‐innovation. Such policies should focus on education, social awareness, stakeholder engagement, support from research institutions, and public R&D investment.