Stakeholder engagement mechanisms and their contribution to eco-innovation: Differentiated effects of communication and cooperation

1 INTRODUCTION

In the last few years, the pressing need to design new production and consumption systems compatible with sustainable development principles has conditioned decision-making in both public and private organizations, while remaining the focal point of the scientific discourse in numerous areas of knowledge. In the areas of knowledge related to business management, the eco-innovation concept was coined at the end of the last century by authors such as Fussler and James (1996) to refer to the business process of developing new products, processes, or services that provide customer and business value but significantly decrease environmental impact. Some years later, authors such as Klemmer, Lehr, and Löbbe (1999) and Rennings (2000) broadened this definition to refer to the fact that eco-innovation can be developed and applied by different agents (firms, policies, associations, private households, etc.) and can be of a technological, organizational, social, or institutional nature. More recently, Kemp and Pearson (2007) interpret eco-innovation in the sense proposed by the OSLO Manual, 1 defining it as the production, assimilation, or exploration of a product, production process, service, or management method or business that is new for the organization (development or adoption) and, in comparison with the pertinent alternatives, generates less environmental risk and pollution and negative impacts derived from the use of resources and energy during its life cycle. This definition shows that any significant novelty for the firm, established in order to reduce environmental impact, can be considered eco-innovation. Although there is a somewhat more radical interpretation of the eco-innovation concept, which focuses on invention in the sense of obtaining tangible results from new ideas and their application (Carrillo-Hermosilla, Del Río, & Könnölä, 2010), this study uses the term eco-innovation in the sense proposed by Kemp and Pearson (2007).

According to current management literature, the implantation of such eco-innovative practices can be interpreted as a response to stakeholders' environmental demands and preferences (Ayuso, Rodríguez, & Ricart, 2006; Cunico, Cirani, Lopes, & Jabbour, 2017; Ryszko, 2016; Yarahmadi & Higgins, 2012). Several studies provide empirical evidence showing that intensity of stakeholder pressure is a factor that promotes proactive environmental strategies, based on technological and organizational environmental improvement measures that exceed regulatory requirements (Christmann, 2004; Ferrón-Vilchez, Darnall, & Aragón-Correa, 2017; Murillo-Luna, Garcés-Ayerbe, & Rivera-Torres, 2008; Sharma & Henriques, 2005; Valero-Gil, Scarpellini, Garcés-Ayerbe, & Rivera-Torres, 2017). The literature that analyses the conditions in which this stakeholder pressure affects the application of specific environmental measures is also extensive. 2 However, there is still room for studying the effectiveness of different stakeholder engagement mechanisms for integrating stakeholders' environmental demands in eco-innovation processes in firms, in other words, the mechanisms on which so-called stakeholder integration capacity is generated in eco-innovation matters. Sharma and Vredenburg (1998) define stakeholder integration capacity as “the ability to establish trust-based collaborative relationships with a wide variety of stakeholders” and establish that this capacity is required in order to reduce environmental impact. Plaza-Úbeda, de Burgos-Jiménez, and Carmona-Moreno (2010) conclude that the stakeholder integration construct comprises three dimensions: knowledge of stakeholders, interactions with stakeholders, and adaptation of firm behaviour to stakeholders' demands. According to the literature, different stakeholder engagement mechanisms enable the consolidation of these dimensions, from simple unilateral informative communication mechanisms to sophisticated participative stakeholder collaboration and cooperation systems (Green & Hunton-Clarke, 2003; Lane & Devin, 2018; Moratis & Brandt, 2017; Reed, 2008; Scandelius & Cohen, 2016; Vollero, Conte, Siano, & Covucci, 2019). However, the different effectiveness of these mechanisms, and their mutual dependence, for fostering the adoption of proactive environmental strategies based on eco-innovation have hardly been studied in the literature. Our study attempts to learn more in this line of research. Its objective is to analyse the specific contribution of two types of stakeholder engagement mechanisms, communication, and cooperation, in the adoption of eco-innovation business measures.

This study provides three types of contribution to the literature. In the first place, the effects of two types of stakeholder engagement mechanisms, communication and cooperation, on a firm's eco-innovation strategy are separately analysed, as the interconnection between the two mechanisms. As far as we can see, there are no previous studies analysing the effects of these engagement mechanisms in detail and using a single relational model. Secondly, the study proposes a novel way of measuring eco-innovation that enables us to consider different degrees of eco-innovative intensity based on a capital model that includes the accumulation of tangible and intangible assets derived from activities recently adopted by firms to reduce environmental impact. Among others, these activities include those that aim to reduce environmental impact through the development or acquisition of R&D, training, market innovations, or the acquisition of machinery, know-how, or innovations. Thirdly, this study provides empirical evidence to previous literature, generally case study-based, of the effect that the stakeholder integration process has on eco-innovation, through communication and cooperation mechanisms.

The paper is structured as follows: the following two sections include a literature review that shows the need for stakeholder integration in eco-innovation processes through different stakeholder engagement mechanisms; the fourth section presents the empirical study, followed by the discussion and conclusions section.

2 STAKEHOLDER INTEGRATION IN ECO-INNOVATION PROCESSES

Because the original definition of eco-innovation proposed by Fussler and James (1996) as innovations in products and processes that improve environmental outcomes while providing consumer and business value, many authors have attempted to add information and detail to the concept. Klemmer et al. (1999), in their summary of the “Impacts of Innovation of Environmental Policy Instruments,” interdisciplinary project commissioned by the German Ministry of Research and Technology, maintain that eco-innovation comprises all measures adopted by relevant agents (firms, politicians, associations, churches, and private households) that (a) develop and apply or introduce new ideas, conducts, products, and processes and b) help to reduce environmental impacts or attain specific sustainability objectives.

Kemp and Pearson (2007) suggest in their definition of eco-innovation, detailed in the introduction section, that for a firm's proenvironmental changes to be classified as eco-innovative, it is sufficient for such changes to be new in the firm, even if not necessarily new for the industry or market. These authors' definition also shows that eco-innovative practices can be implemented throughout the life cycle and can be purchased or developed internally. Later, the Organisation for Economic Co-operation and Development report on sustainable production and eco-innovation (OECD, 2009) broadens this definition by adding that the environmental effects of eco-innovative practices can be intentional or not. In this case, practices aimed at attaining economic, organizational, market, or other objectives, which collaterally improve an organization's environmental impact, are also eco-innovative. 3 According to this broad interpretation, the application of eco-innovative measures could aim at different purposes, such as improving production efficiency, approaching new markets, accessing financial resources, or integrating the view of clients, suppliers, and other key agents in the firm. Therefore, firms must design their eco-innovation strategies considering their dynamic setting and adapt measures to both legal requirements and stakeholders' environmental demands and preferences.

The need to integrate stakeholders in eco-innovation processes was implicitly suggested by Hart (1995) in his Natural Resource-Based View. In his view, Hart claims that the optimal design of a pollution prevention strategy requires reducing environmental impact in all the steps in the value chain. Therefore, what he calls the voice of environment, meaning the perspective of stakeholders, has to be integrated in product design and process development aimed at pollution prevention.

With reference to corporate social responsibility, Barnett (2007) maintains that it is distinguished from other corporate activities by two characteristics: social welfare orientation and stakeholder relationship orientation. This study adopts these two characteristics as pertaining to eco-innovation, which should be based on trust and collaboration with stakeholders to guarantee that their environmental and social welfare demands are met.

Some of the distinctive features or eco-innovation are what makes stakeholder integration so important in the process. For example, environmental innovations are characterized by long-term orientation and a high level of uncertainty compared with other innovations in the firm (Leyva-de la Hiz, Ferrón-Vílchez, & Aragón-Correa, 2018). In these conditions, to drive environmental innovations to obtain positive results requires detailed knowledge and adaptation to the socio-cultural setting and the present and future tastes, interests, and needs of stakeholders. The complexity involved in issues related to sustainability also demands efficient and effective stakeholder integration (Scandelius & Cohen, 2016). This complexity is another feature of eco-innovation processes that make learning shared with stakeholders particularly useful. In this respect, Plaza-Úbeda et al. (2010) argue that interactions between a firm and its stakeholders facilitate the creation of shared values and trust, necessary for the generation of collective knowledge through an organizational learning process.

Reed (2008) divides the arguments for stakeholder integration in environmental decision-making into two types, normative and pragmatic. Normative arguments focus on benefits for democratic society, citizenship, and equity. Stakeholder participation increases the likelihood of obtaining these benefits. Pragmatic arguments focus on the quality and durability of environmental decisions. Stakeholder integration enables intervention and technologies to be better adapted to local socio-cultural and environmental conditions. The arguments reviewed in this section for stakeholder integration in eco-innovation process include both types of argument. In this respect, we believe that a firm's eco-innovation strategy depends on stakeholders' environmental concerns, objectives, and preferences and that their appropriate development largely depends on stakeholder integration capacity, defined by Sharma and Vredenburg (1998) as the ability to establish trust-based collaborative relationships with stakeholders with regard to environmental issues.

3 COMMUNICATION AND COOPERATION AS ENGAGEMENT MECHANISMS AND THEIR CONTRIBUTION TO ECO-INNOVATION

Plaza-Úbeda et al. (2010) interpret stakeholder integration as a gradual process. According to these authors, identification and knowledge of stakeholders is the first step for a company to determine which stakeholders it must engage. Greater integration requires interaction between stakeholders and company, through reciprocal relationships. Finally, adaptational behaviour refers to the set of changes made in the company's behaviour with a view to meeting its stakeholders' demands. The key to this highest level of stakeholder integration is the responsiveness idea, which implies translating stakeholders' knowledge and interaction into actions. Progressing through these levels of integration requires the implementation of engagement mechanisms. The implementation of basic engagement mechanisms, such as unilateral communication, guarantees reaching the first level of integration, identification and knowledge of stakeholders, and their preferences. The second step, interaction, requires the implementation of more advanced bilateral communication systems, guaranteeing reciprocal relationships and feedback. The last step of integration, adaptational behaviour, requires effective collaboration and stakeholder participation in decision-making processes through mechanisms such as active bilateral communication, association, or cooperation.

Following the idea that different levels of integration are possible, Green and Hunton-Clarke (2003) propose three possible stakeholder participation systems: (i) informative participation: requiring unilateral or bilateral communication engagement mechanisms, involving no more than the transmission of information; (ii) consultative participation: facilitating a higher level of stakeholder integration and requiring communication mechanisms that involve interviewing stakeholders at a deeper and more exploratory level; and (iii) decisional participation: facilitating the greatest degree of stakeholder integration in a firm, as stakeholders directly participate in the decision-making process. Several authors have supported the idea that stakeholder integration in the development of sustainability and corporate social responsibility strategies involves the gradual development of different engagement mechanisms, such as communication, consultation, dialogue, collaboration, association, or cooperation (Lane & Devin, 2018; Moratis & Brandt, 2017; Morsing & Schultz, 2006; Vollero et al., 2019). In the previous literature, however, we have found very little empirical evidence showing the relative effectiveness of these engagement mechanisms that facilitate stakeholder integration for the development of corporate social responsibility strategies, and much less specifically eco-innovation strategies.

As far as we know, Ayuso et al. (2006), from two case studies, highlight stakeholder dialogue and stakeholder knowledge integration as capabilities for sustainable innovation. Agudo-Valiente, Garcés-Ayerbe, and Salvador-Figueras (2015), based on a sample of 416 Spanish firms, show the importance of establishing channels of communication with stakeholders in order to adopt corporate social responsibility measures but do not analyse the differentiated effect of different engagement mechanisms. Salem, Shawtari, Shamsudin, and Hussain (2016), based on 226 industrial corporations, consider different degrees of stakeholder integration in environmental matters, know-how, and interaction, but their objective differs from that of our study, as they study the effects on a firm's competitiveness, measured through three constructs: profits, satisfaction, and image-related aspects. Finally, Cunico et al. (2017) studied the effect of technological cooperation (as the highest degree of integration) on eco-innovation strategy in cassava processing companies. Using a sample of 33 questionnaires, the authors conclude that firms do not have the necessary competencies for an efficient eco-innovation strategy alone and require cooperation with other organizations. They do not analyse, however, the impact of communication.

This study contributes to the literature with a differentiated analysis of the effects of two types of engagement mechanisms for stakeholder integration in eco-innovation processes, communication, and cooperation. In the context of the research, based on authors such as Green and Hunton-Clarke (2003) and Plaza-Úbeda et al. (2010), we define communication as an engagement mechanism that enables information to be transmitted between the firm and its stakeholders; it can take on different forms (unilateral or bilateral, formal-informal, regular-ocsasional, structured, or otherwise), and it reduces or eliminated information asymmetries between the parties. The contribution of this engagement mechanism to eco-innovation processes can be seen from the perspective of Institutional Theory. According to this theory, pressure groups and the general public bring pressure to bear for organizations to rationalize their businesses, strategic practices, and outcomes (DiMaggio & Powell, 1983; Meyer & Rowan, 1977). Based on this approach, communication mechanisms that identify and describe stakeholder preferences and interests will promote the adoption of relatively standard eco-innovation measures, to respond to objectives such as compliance with regulations and obtaining legitimacy or credibility from stakeholders. For example, firms often adopt the ISO 14001 standard in anticipation of, or in response to, customer demand (Delmas & Toffel, 2008). Therefore, as a result of communication with stakeholder groups, firms can be expected to adopt standard and institutionalized environmental management practices in a search for social legitimacy, such as environmental certifications, the establishment of environmental criteria for supplier selection, participation in voluntary environmental associations or programmes, or even greenwashing practices.

Hypothesis 1 is established based on the above arguments:

Organizations that face common institutional pressure, however, often adopt different environmental practices (Delmas & Toffel, 2008). In the context of eco-innovation, we explain these differences as the result of different stakeholder integration levels. Indeed, communication with stakeholders forms the foundation for more advanced collaboration and cooperation engagement mechanisms (Scandelius & Cohen, 2016), which will result in a greater development of eco-innovation in the firm. Based on Lozano (2008), our study sees cooperation as a mechanism that allows stakeholders to get involved in the eco-innovation process through monitoring and evaluation, learning from each other, and sharing experiences and objectives. From this perspective, cooperation with stakeholders in environmental matters shows a higher degree of stakeholder integration than communication, so more intense eco-innovation efforts can be expected in the firm.

The contribution of cooperation mechanisms to the development of eco-innovation measures can be considered based on the Resource Based View. This perspective is based on the premise that the firm can gain a sustainable competitive advantage if its resources and capabilities are valuable, nonsubstitutable, rare, and not imitable by their competitors (Barney, 1991). From this viewpoint, certain alliances with partners or other market agents can lead to both parties benefitting from access to heterogeneous resources that can be essential to apply an environmental innovation strategy, besides reducing the costs of these resources (Yarahmadi & Higgins, 2012). On the other hand, in the context of sustainability, cooperation engagement mechanisms facilitate the coordination of several intangible assets (such as know-how, for example), so the complexity involved in completing and coordinating the integration process makes it a strategic capacity that is difficult to imitate (Plaza-Úbeda et al., 2010). Also important in this regard is the capacity to generate eco-innovation information and know-how in a reciprocal manner, sharing both environmental risks and learning. Unlike those promoted by communication mechanisms, the eco-innovation results promoted by cooperation are path-dependent and favour competitiveness because they are difficult to replicate and socially complex. In this respect, Salem et al. (2016) provide empirical evidence that knowledge of stakeholders' environmental interests has no impact on a firm's competitiveness; interaction with stakeholders in environmental protection matters does improve competitiveness. This shows that eco-innovation activities derived from cooperation differ from those that result from the most basic communication engagement mechanisms.

Based on the above arguments, and considering that communication is a basic aspect of cooperation, we formulate the hypothesis that communication has a positive indirect effect on eco-innovation, through the cooperation activities that it promotes:

4 EMPIRICAL STUDY

4.3 Endogenous variable

4.3.1 EII

Following the methodology used by Garcés-Ayerbe and Cañón-de-Francia (2017) and Pakes and Schankerman (1984), we consider that the eco-innovation process generates intangible assets that can be cumulative, so EII is measured through eco-innovation capital (EC) corrected for size; EC is a direct function of the firm's eco-innovation investment (EI) in previous periods, as well as EI in the current period, and is calculated using a stock measure constructed from a formulation of depreciated sums of the EIs made in the last few and current periods, using Koyck lags:

where p is the number of years before the current year t in which environmental investments affected the stock of EC. Following the approach of Hirschey and Weygandt (1985) for R&D investments, the useful life of investments in eco-innovation is considered to be 5 years. Therefore, following Cockburn and Henderson (1994), 7 the depreciation rate δ is considered to be a constant 20%.

To measure EI, we use a proxy variable based on the information provided by the PITEC database. This proxy variable is calculated as follows:

where TIE is total expenditure 8 in innovation and EIMP is a measure of the importance 9 that the firm gives to the innovation objective aimed at reducing environmental impact.

4.6 Methodology

The EII model is shown in Equations 1 to 3:

(1)

(2)

(3)

where EII is the dependent variable, COMM is the independent variable, and COOP is the mediator; coefficients i₁, i₂, and i₃ are intercepts in each equation; and ε₁, ε₂, and ε₃ are residuals. D_n are (N − 1) dummy control variables for N = 18 sector of activity. In Equation 1, coefficient c represents the total effect that COMM can have on EII. In Equation 2, coefficient c′ denotes the relation between COMM and EII controlling for COOP, representing the direct effect of COMM on EII that is not intervened by COOP. Coefficient b denotes the relation between COOP and EII controlling for COMM. Finally, in Equation 3, coefficient a indicates the relation between COMM and COOP (MacKinnon, 2008). Equations 2 and 3 are represented in Figure 1.

The traditional Baron and Kenny (1986) method used Sobel's Z test as the inferential test for the indirect effect of how much X (COMM) affects Y (EII) through M (COOP). Sobel's Z test is calculated as follows:

where a and b are the unstandardized coefficients from the Baron and Kenny (1986) method, s_a is the standard error estimated of a and b, and s_b is the standard error estimated of b. Until about 10 years ago this method was considered best practice, although it is starting to become less popular, as the Sobel test used to test the indirect effect assuming normality, and this may not always hold. Most of the alternative methods rely on bootstrapping because no assumption about normality is required. The bootstrapping method uses a resampling procedure to form sampling distribution. It involves repeatedly drawing samples from the original sample in order to create an empirical approximation of the sampling distribution of the indirect effect under study and it was used in this study to test mediation.

In testing mediation, the relationship among the variables must satisfy the following conditions (Sarkis, Gonzalez-Torre, & Adenso-Diaz, 2010): (1) the independent variable must influence the dependent variable, (2) the independent variable must influence the mediator, (3) the mediator must influence the dependent variable, and (4) the effect of the independent variable on the dependent variable must diminish after controlling for the effects of the mediator. According to Baron and Kenny (1986), Tepper, Shafer, Meredith, and Marsh (1996), and Sarkis et al. (2010), if all of these conditions are satisfied and the influence of the independent variable becomes nonsignificant in the presence of the mediator, the effects of the independent variable are said to be completely or fully” mediated by the mediator. Otherwise, if all the conditions are satisfied, but the influence of the independent variable remains significant in the presence of the mediator, the effects of the independent variable are said to be partially mediated.

5 RESULTS

The mediation model results are shown in Table 3. We can see the effects of the exogenous variables (communication and cooperation) on the endogenous EII variable, which are positive and statistically significant. Specifically, the effect of communication with stakeholders on EII is positive and significant, enabling us not to reject proposed hypothesis 1. The table also shows that the indirect effect of communication through cooperation is also positive and statistically significant, so we do not reject hypothesis 2. This means that communication with stakeholders has a positive effect on EII; this effect will be greater if communication eventually leads to cooperation (greater stakeholder integration). Therefore, considering that stakeholder integration capacity is developed through stakeholder engagement mechanisms that are measured through communication, feedback, and cooperation, it can be concluded that stakeholder integration has a positive effect on EII.

Regarding testing mediation, as is shown in Table 3, the model fulfils the four considerations proposed by Sarkis et al. (2010). The model meets the first of the conditions, where COMM is the independent variable and influences dependent variable EII. The second and third conditions are also met, as the independent COMM variable influences the COOP mediator in a positive and significant manner, and the COOP mediator variable influences the dependent variable. Also, when the mediator variable is added to the model, the influence of COMM on independent variable EII diminishes, that is, the direct effect of COMM is lower than the total effect, so the fourth condition is also met. Given that all the conditions are satisfied, but the influence of COMM remains significant in the presence of the mediator COOP, we are facing a partially mediated model.

6 CONCLUSIONS

This study analyses the effect of communication and cooperation as engagement mechanisms of stakeholder's integration on EII in firms. The results add to previous literature that interprets firms' eco-innovation strategy as the result of the process of adapting to stakeholders' knowledge, requirements, and expectations in environmental matters. This study provides empirical evidence in this respect and suggests that firms implementing eco-innovation activities integrate stakeholder's environmental interests and knowledge through communication and cooperation engagement mechanisms.

Consistent with the statements originally made by Hart (1995), this study concludes that firms that develop greater stakeholder integration capacity make greater efforts in eco-innovation. The results of an empirical analysis of information relating to a sample of Spanish firms provide more empirical evidence to support the results previously obtained by Plaza-Úbeda, Burgos-Jiménez, Vazquez, and Liston-Heyes (2009), who argued that stakeholders' integration requires a firm's strategic objectives to be in line with stakeholders' goals so that economic, environmental, or reputation-related results could be obtained.

In the previous environmental management literature, stakeholder integration was presented by some authors as a gradual process in which the firm starts to involve stakeholders through low involvement mechanisms aimed at obtaining information and know-how and then, after learning about their demands, adapts decisions through high involvement or interaction mechanisms (Green & Hunton-Clarke, 2003; Plaza-Úbeda et al., 2010). Some authors have shown how stakeholder integration capacity has a positive effect on competitiveness (Salem et al., 2016). Other authors have shown the effect of stakeholder engagement mechanisms on eco-innovation strategy through case studies, but, to the best of our knowledge, none have shown empirical evidence of the differentiated effect of communication and cooperation mechanisms on eco-innovation strategy. The results of this study show that communication, as the first stakeholder engagement mechanism, has a positive effect on eco-innovation strategy. This suggests that the information obtained from communication with stakeholders is directly useful for advancing in eco-innovation strategy design. It would therefore appear to be advisable for firms that aim to be eco-innovative to enable information channels not only for informing stakeholders but also for learning about their environmental preferences through surveys, suggestion boxes, interviews, events, fairs, etc. As Agudo-Valiente et al. (2015) suggested, the more information a firm has, the better equipped it will be to make decisions and apply the tools, activities, and processes that best satisfy its stakeholders. A firm is then able to accumulate knowledge that can be used to understand stakeholder preferences and take them into account when designing eco-innovation strategy.

This study has also confirmed that communication with stakeholders is a step that comes before cooperation. The results also show that cooperation with stakeholders also supports eco-innovation strategy development. It is therefore concluded that when firms reach the greatest degree of stakeholder integration, through cooperation mechanisms, eco-innovation strategy is greater than when there is only communication. This result is consistent with what Salem et al. (2016) say about the advantages of achieving high levels of stakeholder integration, supported by empirical evidence.

Communication with stakeholders is a mechanism through which a firm acquires and transmits information to stakeholders, acquiring know-how and reducing information asymmetries. Cooperation is a mechanism that involves the use of acquired information to create something new, to jointly develop a proposal, to share information, and to plan joint workshops, among other activities, so cooperation with stakeholders will steer environmental objectives towards satisfaction of their demands. Both stakeholder engagement mechanisms enable the firm to gradually make environmental decisions based on stakeholder demands, through low and high involvement mechanisms. The results obtained show that when a firm implements both mechanisms, first by establishing communication and subsequently through cooperation with stakeholders in eco-innovation matters, the eco-innovation process is of a higher level. It can be assumed that much more environmental technological capital can be accumulated with the integration of cooperation than only through communication. Cooperation with stakeholders enables a firm to integrate their preferences in its decision-making processes, such that eco-innovation practices will be adhered to the firm's strategic objectives.

This study considers that the eco-innovation process produces intangible assets (capabilities, know-how, etc.) that can be cumulative, so we do not only measure eco-innovation by firm investments in the current year but also consider the previous period. Due to how we measure eco-innovation, the results suggest that when stakeholder integration is reached (when communication mechanisms precede cooperation mechanisms), the firm learns more about stakeholders' eco-innovation preferences and implements those learnings in its eco-innovation strategy.

From a practical point of view, the results could be taken into account by managers who want to improve their eco-innovation strategy. Integrating stakeholders' preferences into eco-innovation objectives has to be carried out through a gradual process of engagement, where acquiring relevant eco-innovation information through communication mechanisms as a first step will develop into an accumulation of stakeholders environmental preferences. The next step would be the use of that information to create and accumulate eco-innovation knowledge and jointly develop an eco-innovation strategy in line with stakeholders' preferences. This joint process involving the firm and its stakeholders will be through cooperation mechanisms that will results in a more advanced environmental strategy through eco-innovation.

Finally, to complement our work, future research would benefit from gaining a deeper understanding by analysing several concerns and limitations that have emerged from this study. First, although the sample is representative of Spanish industrial activity, further studies should increase the sample by including international firms in order to obtain more generalized results. Secondly, future studies could broaden the range of stakeholders, considering different stakeholders and the effect of different groups on a firm's eco-innovation strategy. Such studies, for example, could analyse the different effects of internal and external stakeholders on eco-innovation strategy, and how stakeholder engagement mechanisms regarding eco-innovation strategy vary according to different stakeholders. Thirdly, future studies could analyse the effect of relations of trust with stakeholders in the long term, and whether they have a greater effect on eco-innovation strategy through stakeholder engagement mechanisms. Finally, future studies could analyse the effect of the integration of stakeholder preferences in eco-innovation strategy on the firm's financial performance and whether firms that more integrate stakeholder preferences are more profitable.