Investment in Green Innovation: How does It Contribute to Environmental and Financial Performance?

Investment in green innovation has become a vital driver in many industries today. How green innovation contributes to a firm's environmental and financial performance remains uncertain and there is debate about this relationship. Using data gathered from 243 firms between 2013 and 2020, our study aims to provide new evidence on this topic. Our results indicate that green innovation has a clear, positive effect on environmental and financial performance in corporations striving to achieve sustainability and environmental protection. We also find that green innovation mediates the relationship between environmental and financial performances. Based on our findings, we suggest that green innovation is a profitable strategy in the long run with a positive influence on the environmental and financial performances of a firm. Our findings are robust when tested by alternative econometric and variable specifications and offer insights to policymakers and business managers.