IDEAS home Printed from https://ideas.repec.org/a/bla/bstrat/v34y2025i6p7687-7699.html

How Does Environmental Innovation Affect Firms' Long‐Term Performance? An Analysis Based on Different Innovation Motivations

Author

Listed:
  • Zhongju Liao
  • Peiyan Zheng
  • Ke Chen
  • Yufei Wang

Abstract

Firms' motivation for implementing environmental innovation and the mechanisms behind the impact of environmental innovation on long‐term performance are topics of interest in the context of sustainable development. This study analyzed data from 600 Chinese manufacturing listed firms from 2016 to 2022, using multiple regression and inter‐group difference analyses based on the attribution theory and resource‐based view. The findings indicate that environmental innovation enhances firms' long‐term performance. Environmental innovation driven by altruistic and strategic motivations results in a greater improvement in firms' long‐term performance than environmental innovation driven by egoistic motivations. Government subsidies play a mediating role between environmental innovation and long‐term performance; however, customer relationships do not. This study provides guidance for firms to implement environmental innovation, achieve sustainable development, and shape their value orientation.

Suggested Citation

  • Zhongju Liao & Peiyan Zheng & Ke Chen & Yufei Wang, 2025. "How Does Environmental Innovation Affect Firms' Long‐Term Performance? An Analysis Based on Different Innovation Motivations," Business Strategy and the Environment, Wiley Blackwell, vol. 34(6), pages 7687-7699, September.
    • Handle: RePEc:bla:bstrat:v:34:y:2025:i:6:p:7687-7699
    DOI: 10.1002/bse.4370
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/bse.4370
    Download Restriction: no
    File URL: https://libkey.io/10.1002/bse.4370?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Xiaoying Zhai & Yahui Hao & Eric M. Scheffel & Yongmin Zhang, 2020. "Investor Disagreement, Government Subsidies and the Abnormal Day-one Returns of IPOs: Evidence from China," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 56(14), pages 3522-3550, November.
    2. Xiaowei Rose Luo & Danqing Wang, 2021. "Are Politically Endorsed Firms More Socially Responsible? Selective Engagement in Corporate Social Responsibility," Journal of Business Ethics, Springer, vol. 170(3), pages 535-555, May.
    3. Subhabrata Bobby Banerjee, 2001. "Managerial perceptions of corporate environmentalism: interpretations from industry and strategic implications for organizations," Journal of Management Studies, Wiley Blackwell, vol. 38(4), pages 489-513, June.
    4. Mantovani, Danielle & de Andrade, Lucas Magalhães & Negrão, Angela, 2017. "How motivations for CSR and consumer-brand social distance influence consumers to adopt pro-social behavior," Journal of Retailing and Consumer Services, Elsevier, vol. 36(C), pages 156-163.
    5. Licheng Yang & Shijie Song & Chunlin Liu, 2024. "Green signals: The impact of environmental protection support policies on firms' green innovation," Business Strategy and the Environment, Wiley Blackwell, vol. 33(4), pages 3258-3278, May.
    6. Constantinos N. Leonidou & Dionysis Skarmeas, 2017. "Gray Shades of Green: Causes and Consequences of Green Skepticism," Journal of Business Ethics, Springer, vol. 144(2), pages 401-415, August.
    7. Shuai Wang & Fayyaz Ahmad & Yanlong Li & Nabila Abid & Abbas Ali Chandio & Abdul Rehman, 2022. "The Impact of Industrial Subsidies and Enterprise Innovation on Enterprise Performance: Evidence from Listed Chinese Manufacturing Companies," Sustainability, MDPI, vol. 14(8), pages 1-17, April.
    8. Jiwei Wang & Kangtao Ye, 2015. "Media Coverage and Firm Valuation: Evidence from China," Journal of Business Ethics, Springer, vol. 127(3), pages 501-511, March.
    9. Hüseyin Doluca & Marcus Wagner & Jörn Block, 2018. "Sustainability and Environmental Behaviour in Family Firms: A Longitudinal Analysis of Environment‐Related Activities, Innovation and Performance," Business Strategy and the Environment, Wiley Blackwell, vol. 27(1), pages 152-172, January.
    10. Hao, Xiaoli & Wen, Shufang & Li, Ke & Wu, Junwei & Wu, Haitao & Hao, Yu, 2023. "Environmental governance, executive incentive, and enterprise performance: Evidence from Chinese mineral enterprises," Resources Policy, Elsevier, vol. 85(PA).
    11. Ruth, Derek & Iyer, Dinesh N. & Sharp, Barton M., 2013. "Motivation and ability in the decision to acquire," Journal of Business Research, Elsevier, vol. 66(11), pages 2287-2293.
    12. Nick Johnstone & Ivan Haščič & Julie Poirier & Marion Hemar & Christian Michel, 2012. "Environmental policy stringency and technological innovation: evidence from survey data and patent counts," Applied Economics, Taylor & Francis Journals, vol. 44(17), pages 2157-2170, June.
    13. Alan I. Murray, 1989. "Top management group heterogeneity and firm performance," Strategic Management Journal, Wiley Blackwell, vol. 10(S1), pages 125-141, June.
    14. Yan, Haining & Wang, Zijin & Shu, Changjiang & jennhae, liou, 2024. "How does social security contribution affect enterprise performance: A perpective based on new structural economics," Economic Analysis and Policy, Elsevier, vol. 84(C), pages 1596-1607.
    15. Ru-Jen Lin & Rong-Huei Chen & Thao-Minh Ho, 2013. "Market Demand, Green Innovation, and Firm Performance: Evidence from Hybrid Vehicle Industry," Diversity, Technology, and Innovation for Operational Competitiveness: Proceedings of the 2013 International Conference on Technology Innovation and Industrial Management,, ToKnowPress.
    16. Baruch Lev & Christine Petrovits & Suresh Radhakrishnan, 2010. "Is doing good good for you? how corporate charitable contributions enhance revenue growth," Strategic Management Journal, Wiley Blackwell, vol. 31(2), pages 182-200, February.
    17. Yang, Rui & Tang, Wansheng & Zhang, Jianxiong, 2021. "Technology improvement strategy for green products under competition: The role of government subsidy," European Journal of Operational Research, Elsevier, vol. 289(2), pages 553-568.
    18. Kong, Gaowen & Zhang, Hui & Wang, Di & Yang, Zhiqing & Liu, Hua, 2021. "Political promotion and pay gap: Evidence from SOEs in China," Economic Analysis and Policy, Elsevier, vol. 69(C), pages 450-460.
    19. Zhongju Liao, 2018. "Corporate culture, environmental innovation and financial performance," Business Strategy and the Environment, Wiley Blackwell, vol. 27(8), pages 1368-1375, December.
    20. Liu, Ying & Huang, Hongyun & Mbanyele, William & Wei, Zhixing & Li, Xin, 2025. "How does green industrial policy affect corporate green innovation? Evidence from the green factory identification in China," Energy Economics, Elsevier, vol. 141(C).
    21. Xiaoying Zhai & Yahui Hao & Eric M. Scheffel & Yongmin Zhang, 2020. "Investor Disagreement, Government Subsidies and the Abnormal Day-one Returns of IPOs: Evidence from China," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 56(14), pages 3522-3550, November.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Nosheen Rasool & Murugesh Arunachalam & Nirosha Hewa Wellalage & Vijay Kumar, 2025. "Unveiling the Relationship Between ESG and Growth of Unlisted Firms: Empirical Insights From Eastern Europe and Central Asia," Business Strategy and the Environment, Wiley Blackwell, vol. 34(5), pages 5669-5686, July.
    2. Peng, Shengnan & Liu, Chan & Wang, Ze & Ye, Zihan & Sun, Xialing & Tan, Zhanglu, 2024. "The impact of the carbon reduction policy effectiveness on energy companies' ESG performance," International Review of Financial Analysis, Elsevier, vol. 96(PB).
    3. Francesco Chirico & Kimberly A. Eddleston & Pankaj C. Patel, 2025. "Does it Pay to Patent Green Innovations? Stock Market Reactions to Family and Nonfamily Firms’ Green Patents," Journal of Business Ethics, Springer, vol. 198(4), pages 947-970, May.
    4. Hong, Ziyang & Liu, Qingfu & Tse, Yiuman & Wang, Zilu, 2023. "Black mouth, investor attention, and stock return," International Review of Financial Analysis, Elsevier, vol. 90(C).
    5. Lu Zheng & Konstantinos Iatridis, 2022. "Friends or foes? A systematic literature review and meta‐analysis of the relationship between eco‐innovation and firm performance," Business Strategy and the Environment, Wiley Blackwell, vol. 31(4), pages 1838-1855, May.
    6. Yin, Libo & Zhu, Xiaoye, 2025. "Investor–firm interactions versus investor–investor interactions: Which enhances investor learning better?," International Review of Financial Analysis, Elsevier, vol. 104(PA).
    7. Rubén Martínez‐Alonso & María J. Martínez‐Romero & Alfonso A. Rojo‐Ramírez, 2025. "Greening the Path to Family Firm Innovation: Empirical Evidence From the Spanish Manufacturing Industry," Business Strategy and the Environment, Wiley Blackwell, vol. 34(4), pages 4661-4678, May.
    8. Nguyen, Nga & Priporas, Constantinos-Vasilios & McPherson, Mark & Manyiwa, Simon, 2023. "CSR-related consumer scepticism: A review of the literature and future research directions," Journal of Business Research, Elsevier, vol. 169(C).
    9. Dimitrios Kafetzopoulos & Maria Gianni & Elpida Samara & Pavlos Kilintzis, 2025. "Eco-Innovation and Firms’ Performance: The Mediating Role of Eco-Innovation Strategy," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 16(1), pages 2341-2365, March.
    10. Yu, Lianchao & Sha, Haobin & Ji, Peinan, 2025. "Government-led voluntary environmental regulation and corporate investment efficiency: Evidence from the green factory certification in China," Energy Economics, Elsevier, vol. 152(C).
    11. repec:bjc:journl:v:13:y:2026:i:4:p:1787-1820 is not listed on IDEAS
    12. Jonathan Luffarelli & Panos Markou & Antonios Stamatogiannakis & Dilney Gonçalves, 2019. "The effect of corporate social performance on the financial performance of business‐to‐business and business‐to‐consumer firms," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 26(6), pages 1333-1350, November.
    13. Deng, Yu & Yu, Chenming & Zhong, Shengyang, 2025. "From government subsidies to media attention: A study of corporate environmental protection investment strategies driven by these two factors," International Review of Financial Analysis, Elsevier, vol. 104(PA).
    14. Andrikopoulos, Athanasios & Zheng, Min, 2023. "A dynamic analysis of the neglected firm effect," International Review of Financial Analysis, Elsevier, vol. 85(C).
    15. Libena Tetrevova & Michaela Kotkova Striteska & Ondrej Kuba & Vineeth Prakash & Viktor Prokop, 2025. "When Trust and Distrust Come Into Play: How Green Concern, Scepticism and Communication Affect Customers' Behaviour?," Business Strategy and the Environment, Wiley Blackwell, vol. 34(3), pages 3311-3337, March.
    16. Jean D. Kabongo, 2019. "Sustainable development and research and development intensity in U.S. manufacturing firms," Business Strategy and the Environment, Wiley Blackwell, vol. 28(4), pages 556-566, May.
    17. Zichang Liu & Nik Hadiyan Binti Nik Azman, 2025. "The Impact of Technology Innovation Output on Firm Value of Technology Innovation SMEs in China," Business Management and Strategy, Macrothink Institute, vol. 16(1), pages 106-125, June.
    18. Nurlan Orazalin & Mady Baydauletov, 2020. "Corporate social responsibility strategy and corporate environmental and social performance: The moderating role of board gender diversity," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 27(4), pages 1664-1676, July.
    19. Chen, Kehong & Fan, Yiming, 2025. "Selection of R&D techniques: The influence of spillover effects and government subsidies," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 194(C).
    20. Papen, Marie-Christin & Magalhaes, Katrin Marques & Tenbrock, Sebastian & Märkel, Christian, 2022. "Digitalisierungsanwendungen und Identifikation von Digitalisierungstrends im Mittelstand," WIK Discussion Papers 495, WIK Wissenschaftliches Institut für Infrastruktur und Kommunikationsdienste GmbH.
    21. Lixiang Wang & Wendi Hou & Yupei Liu, 2023. "How do co‐shareholding networks affect negative media coverage? Evidence from China," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 63(4), pages 4221-4249, December.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:bstrat:v:34:y:2025:i:6:p:7687-7699. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://onlinelibrary.wiley.com/journal/10.1002/(ISSN)1099-0836 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.