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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.
Liu et al. (Thu,) studied this question.