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Purpose Environmental pollution has emerged as a major concern in the 21st century following the introduction of sustainable development (SD) by the year 2030, whereby one of the predominant goals is related to the manufacturing industry. In Malaysia, the automotive industry is acknowledged as the backbone driving for economic growth and recognised as a source of environmental deterioration. Therefore, eco-innovation is, thus, introduced as one of the efforts for minimised environmental effects, reduced social impact and firm value sustenance. In particular, eco-product innovation is one of the renowned environmental innovation dimensions and displays high adoption and diffusion rates in developed countries due to green awareness and government financial assistance. However, developing countries such as Malaysia show relatively low adoption of such practices amongst companies, whereby most of the efforts are driven by the governments, supplier and customer demands. Therefore, this paper aims to delineate the factors of voluntary initiatives undertaken by the Malaysian automotive and auto parts industry towards eco-product innovation. Design/methodology/approach The research drew from the micro-level perspective, thus using dynamic capabilities (DC) constructs and environmental management system (EMS) strategy variables. The constructs included technology collaboration, green human resources and eco-culture, while the variables denoted formal EMS and top management support. Survey data were obtained from 242 entities within the Malaysian automotive and auto parts industry, which were subjected to analysis via confirmatory factor analysis and structural equation modelling. Findings The findings revealed the moderating role played by eco-product innovation for the association linking EMS strategy and sustainability development, while no moderator effects were observed between DC and sustainability development. Thus, future research can be performed in the meso and macro-level areas by using qualitative research across different sectors. Originality/value This paper explicates novel literature content, particularly for the field of eco-product innovation; it positions an empirical analysis from the micro-level perspective regarding the antecedence of DC and environmental strategy towards eco-product innovation and SD, mainly in the automotive industry.
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