Ripple of green innovation: Decoding hidden performance drivers in China’s high-emission industries

Amid global climate change and resource scarcity, green innovation has become a key driver of corporate sustainability and competitiveness. This study examines whether, how, and when GIN creates value in China’s high-emission industries. Using panel data from publicly listed firms (2013–2022) and applying a system general method of moments to address dynamics and endogeneity, we test nonlinear, lagged, and ownership-based effects. Results show an inverted-U relationship between green innovation intensity (GIN) and performance that evolves over time: moderate innovation yields rising benefits with delayed realization, while excessive intensity leads to diminishing or negative returns. Ownership differences further shape outcomes due to varied resource access and policy constraints. Grounded in dynamic capabilities theory, we propose a “resource integration–capability threshold–performance turning point” framework explaining how firms translate green investment into competitive advantage under shifting institutional conditions. The study contributes by integrating dynamic capabilities with nonlinear and intertemporal views of GIN, providing large-sample evidence on lagged, ownership-specific value creation, and offering actionable guidance: optimizing GIN intensity near the threshold, balancing short- and long-term trade-offs, and aligning governance and finance with policy regimes. This is the first systematic validation of this mechanism in China’s high-emission sectors, offering insights for policymakers and managers pursuing sustainable, long-term gains.