Corporate Dynamic Eco‐Innovation Capability and Carbon Emission Reduction: Evidence From African Listed Firms With the Role of Institutional Pressures

Despite the global emphasis on simultaneous achievement of higher growth and lower pollution (green growth), the dynamic link between eco‐innovation and CO 2 emissions remains inadequately understood globally and specifically in Africa, with a complex and diverse institutional and regulatory landscape. Understanding the bidirectional link between the two variables helps to ascertain if eco‐innovation engenders low‐carbon development and if greater carbon emission disclosure induces more eco‐innovation. Against this background, this study investigates the bidirectional relationship between corporate dynamic eco‐innovation and CO 2 emissions disclosure, while examining how institutional pressures (coercive, normative and mimetic) moderate this relationship. Drawing on institutional–dynamic capability theory and using a rich panel dataset of African listed firms from 2012 to 2024 (4030 firm‐year observations), this study applies the newly developed panel‐ and quantile‐based causality Granger methods and novel recent IV quantile regression methods to address endogeneity and simultaneity modelling issues and heterogeneity across the emissions and innovation distributions. Results reveal a significant bidirectional relationship: Increased eco‐innovation enhances CO 2 emissions disclosure, whereas emissions reporting also engenders further eco‐innovation across quantiles. However, institutional pressures redirect this relationship, forcing eco‐innovation to reduce emissions and emissions to drive innovation under external scrutiny. These findings, which persist across quantiles, highlight the disciplining role of institutions in African sustainability practices. The study recommends that policymakers blend regulatory enforcement with voluntary standards to foster innovation‐driven transparency. Managers should treat disclosure and innovation as interconnected levers for legitimacy and competitiveness.