Prior research has highlighted a variety of external and internal drivers of green innovation (GI), yet much less is known about how firms interpret their own environmental performance and adjust GI strategies accordingly. Drawing on the behavioral theory of the firm, this study investigates how environmental performance feedback is associated with firms’ GI decisions. Using panel data from Chinese publicly listed firms, the results reveal a U-shaped relationship between performance below aspirations and GI, and an inverted U-shaped relationship when performance exceeds aspirations. Organizational slack weakens both patterns, reducing firms’ responsiveness to both negative and positive environmental performance feedback. These findings provide new insight into how firms adapt their GI strategies in response to environmental performance feedback signals.
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Su et al. (2026) studied this question.
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