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The Impact of Green Innovation on Corporate Performance: An Analysis Based on Substantive and Strategic Green Innovations

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  • Mingxia Liu

    (School of Economics and Management, Wuhan University, Wuhan 430072, China)

  • Liqian Liu

    (School of Economics and Management, Wuhan University, Wuhan 430072, China)

  • Amei Feng

    (School of Economics, Wuhan Textile University, Wuhan 430072, China)

Abstract

Green innovation is a new approach to achieving sustainable social development. Examining whether firms can reap the rewards of this costly and risky endeavor is essential to assessing whether they can sustainably adhere to a green strategy. This study was conducted on a sample of Chinese A-share-listed firms from 2010 to 2021 and employed a two-way fixed-effects approach. We found that substantive and strategic green innovations significantly impact firms’ financial and environmental performance. Specifically, substantive green innovation leads to a significant improvement in financial performance, while strategic green innovation weakens financial performance; both types of green innovations lead to a significant improvement in environmental performance, with strategic green innovation being more effective in this regard compared to substantive green innovation. Moreover, our heterogeneity analyses showed that substantive green innovation has a weaker effect on improving financial performance in state-owned enterprises (SOEs) and in firms in regions with higher government environmental concerns; similarly, in SOEs, strategic green innovation has a weaker detrimental effect on financial performance. The findings of this study provide substantial evidence for promoting green innovation transformation and the upgrading of enterprises.

Suggested Citation

  • Mingxia Liu & Liqian Liu & Amei Feng, 2024. "The Impact of Green Innovation on Corporate Performance: An Analysis Based on Substantive and Strategic Green Innovations," Sustainability, MDPI, vol. 16(6), pages 1-19, March.
    • Handle: RePEc:gam:jsusta:v:16:y:2024:i:6:p:2588-:d:1361293
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    References listed on IDEAS

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