Unveiling the Link Between Green Innovation and Firm Performance: Insights from Indian Companies

This study introduces an original conceptual model that establishes a systematic relationship between green innovation initiatives and organizational performance outcomes, thereby advancing current scholarly discourse on sustainable development through strategic innovation lenses. Contemporary business practices reveal growing corporate adoption of ecological modernization principles, reflecting a strategic shift toward environmentally conscious operational paradigms and innovative sustainability solutions The results of this study demonstrate a significant positive correlation between green innovation initiatives and corporate performance, providing empirical support for the theoretical underpinnings of green innovation and shedding light on the challenges firms face in adapting to environmental concerns. This research is theoretically grounded in transaction cost economics and ecological modernization theory, both of which are pivotal in understanding environmental innovation. These theoretical perspectives provide critical lenses for resolving conflicts between economic development objectives and ecological conservation imperatives. Specifically, Ecological modernization theory, in particular, underscores how green enterprises view green innovation as a mechanism for fulfilling social responsibilities. By showcasing environmental commitment, firms can foster green initiatives and adopt eco-friendly innovation strategies. The study further highlights the multifaceted benefits of engaging in green innovation activities. Firms that integrate green concepts into their operations often experience enhanced financial performance, improved corporate reputation, and increased operational efficiency. By reducing waste, optimizing resource utilization, and promoting sustainability, green innovation enables companies to achieve long-term growth while aligning with global sustainability goals. This research underscores the strategic importance of green innovation as a pathway to achieving both economic success and environmental stewardship, providing actionable insights for policymakers, managers, and stakeholders.

Acs, Z. J., & Sanders, M. W. (2013). Knowledge spillover entrepreneurship in an endogenous growth model. Small Business Economics, 41(4), 775-795. Aguilera-Caracuel, J., & Ortiz-de-Mandojana, N. (2013). Green innovation and financial performance: An institutional approach. Organization & Environment, 26(4), 365-385. Ahsan, T., Al-Gamrh, B., Qureshi, M. A., & Gull, A. A. (2024). Does eco-innovation foster or hinder environmental performance? Recent evidence from Europe. International Journal of Green Energy, 21(2), 205-215. Arocena, P., Orcos, R., & Zouaghi, F. (2021). The impact of ISO 14001 on firm environmental and economic performance: The moderating role of size and environmental awareness. Business Strategy and the Environment, 30(2), 955-967. Asni, N., & Agustia, D. (2022). The mediating role of financial performance in the relationship between green innovation and firm value: evidence from ASEAN countries. European Journal of Innovation Management, 25(5), 1328-1347. Atif, M., Alam, M. S., & Islam, M. S. (2023). Firm‐level energy and carbon performance: Does sustainable investment matter? Business strategy and the environment, 32(4), 2275-2295. Beltramello, A., Haie-Fayle, L., & Pilat, D. (2013). Why new business models matter for green growth. OECD green growth papers. Carrillo-Hermosilla, J., Del Río, P., & Könnölä, T. (2010). Diversity of eco-innovations: Reflections from selected case studies. Journal of cleaner production, 18(10-11), 1073-1083. Ch’ng, P. C., Cheah, J., & Amran, A. (2021). Eco-innovation practices and sustainable business performance: The moderating effect of market turbulence in the Malaysian technology industry. Journal of Cleaner Production, 283, 124556. Colombelli, A., Ghisetti, C., & Quatraro, F. (2020). Green technologies and firms’ market value: a micro-econometric analysis of European firms. Industrial and Corporate Change, 29(3), 855-875. Dahiya, M., & Singh, S. (2021). The linkage between CSR and cost of equity: an Indian perspective. Sustainability Accounting, Management and Policy Journal, 12(3), 499-521. Deb, S. (2023). Analyzing airlines stock price volatility during COVID‐19 pandemic through internet search data. International Journal of Finance & Economics, 28(2), 1497-1513.