Linking Environmental Innovation and Corporate Climate Strategy to Sustainable Firm Performance: The Role of Green Innovation Strategy and Green Entrepreneurial Orientation

Abstract

Growing environmental challenges and rising climate‐driven pressures have forced organizations to incorporate sustainability concerns in their strategic and innovation activities. However, it is still not well understood how environmental capabilities and climate‐oriented strategies can be translated into sustainable firm performance. Addressing this gap, the current study examines the relationships between environmental innovation, corporate climate strategy, green innovation strategy, green entrepreneurial orientation, and sustainable firm performance. Based on the Natural Resource‐Based View (NRBV) and the entrepreneurial orientation perspective, this study proposes a framework to investigate the direct and indirect impacts of environmental innovation and corporate climate strategy on sustainable firm performance through the mediating effect of green innovation strategy, and to evaluate the moderating effect of green entrepreneurial orientation. Data were collected from 398 respondents employed by energy companies in Beijing and Guangzhou, China, and the proposed hypotheses were examined using partial least squares structural equation modeling (PLS‐SEM). The empirical results show that environmental innovation and corporate climate strategy have a significant positive impact on sustainable firm performance and green innovation strategy for the sustainable development of the firms. Furthermore, a green innovation strategy affects sustainable firm performance and mediates the links between environmental innovation, corporate climate strategy, and sustainable firm performance. The results also show that green entrepreneurial orientation positively moderates the relationship between green innovation strategy and sustainable firm performance. By integrating environmental capabilities, innovation strategy, and entrepreneurial orientation into the model, this study contributes to the sustainability management and innovation literature by providing clarity on the strategic mechanisms by which firms achieve sustainable performance. The findings also offer practical insights for managers and policymakers seeking to promote sustainability‐oriented innovation and climate strategies in energy‐intensive industries.