Nations facing an ongoing pursuit of progression and sustainability often utilize innovation as a mechanism toward economic expansion while ensuring that the local environment is protected. Innovative practices, when implemented sometimes result in grave consequences; the term “Cobra Effect” is assigned to such an event. Like a historical anecdote where the attempt to rid Delhi of cobras resulted in an uptick in killing them, this illustrates how innovation can be detrimental if unaccompanied by adequate institutional capability or incentives. It is essential to explore the dark side of innovation and environmental sustainability in emerging economies, across a spectrum of literature by delving into how well-intended efforts to push things forward can and do backfire, making situations worse while introducing innovations. It offers insights through literature analysis and cases about challenges organizations face in deploying innovative solutions by focusing on resource-scarce settings, socioeconomic divides, and institutional obstacles. This chapter underscores the importance of a nuanced appreciation of the Cobra Effect in the developing world. It brought to the fore the fact that innovation can lead to social harm, health hazards, and environmental and ecological degradation, among others which can be detrimental to the people whose lives are supposed to be taken care of by those in power. When such complexities around innovation in developing countries are addressed, policymakers will be conscious of the illustrative indications that can support truly sustainable and conscientious ways of advancing life in developing economies.