Impact of green innovation openness and green innovation radicalness on firm performance: Evidence from China

Green innovation is widely acknowledged as a critical driver of improved ecological performance; however, its impact on financial performance remains ongoing and unresolved. Based on the resource-based view, we undertook two complementary studies. One utilized data from listed companies and the other leveraged surveys methodologies. These studies comprehensively explore the effects, boundary conditions, and mechanisms of green innovation strategies on financial outcomes. The empirical results reveal that green innovation openness exhibits an inverted U-shaped effect on financial performance, indicating diminishing returns beyond a certain point. In contrast, green innovation radicalness demonstrates a consistent positive linear impact, underscoring the importance of adopting ambitious and transformative innovation strategies. Environmental subsidies amplify the efficacy of both strategies, acting as catalysts for improved financial performance, whereas non-environmental subsidies undermine their effectiveness by potentially diverting resources or diminishing focus on ecological goals. Key mechanisms underlying these relationships include the market advantages of green products and customer greenwashing perception. This contributes to the literature by (1) distinguishing green innovation openness and radicalness to unpack the performance implications of resource acquisition and allocation strategies; (2) highlighting the contingent role of subsidy types in aligning green innovation strategies with external policy support; and (3) introducing market advantage and greenwashing perception as dual mediators to capture customer-centered mechanisms.