Eco-innovation and sustainable rural transformation in emerging markets

Eco-innovative entrepreneurship can contribute to environmental sustainability and socio-economic development by embedding ecological innovation into business activities. This study explores the role of eco-innovation based on business model innovation in organizational capacity development, sustainable competitive advantage and rural socio-economic development. Semi structured interviews, field observations, organisational records and secondary documents were used to conduct a qualitative single case study of the paper seed company, a rural eco-innovative enterprise. Change in organisational capacity was measured by using the McKinsey capacity assessment grid across seven dimensions from 2019 to 2023. The results have shown that business model innovation has been progressing along the lines of cognitive search, creation, experiential learning, and experimentation, alongside the enhancement of strategic, operational, human-resource, infrastructural, structural, and cultural capabilities. Case level competitive positioning was achieved through embedding eco-innovation through recycling, waste utilisation, product diversification, resource efficiency and circular practices. The case also highlights rural employment, participation of women, skill development, community participation, and environmental activities. The study adds value by combining the concepts of eco-innovation, business model innovation and organisational capacity development in a process-oriented approach and by offering qualitative evidence based on an emerging market enterprise in the rural sector.