The introduction of increased recycling and recovery laws in the E.U. and a growing number of countries have forced firms to consider their waste reduction performance. Firms that are unable to understand the complexities of waste recycling and recovery are increasingly at a disadvantage relative to firms that can. Firms for example that do not develop capabilities that support waste recycling must rely on costly third party disposal and treatment options. Identification of beneficial combinations of waste reduction resources however that can be used by firms remains under-explored. In this study, it is proposed that firms investment in resources that allow them to improve their waste reduction performance has competitive advantage implications. These resources are expected to mediate the relationship between external pressure to reduce waste and firms waste reduction performance. These resources, such as equipment, personnel or R D, provide firms with important context-specific capabilities. In this study, the relationship between institutional pressures, waste reduction resources and performance was assessed for a sample of U.S. manufacturers. Study findings indicated that firms investments in waste reduction resources provided them with significant advantages in the form of increased pollution and cost reduction. The results suggest that waste reduction resources better position firms to predict and effectively respond to institutional pressures. From a policy perspective, the benefits of waste reduction resources can be highlighted and more specific payback calculated for specific resource types. The findings of this study further support the role of resources to environmental performance improvement in the study of sustainable operations.