The Role of Green Innovation Appropriability and Firm Performance: Evidence from the Chinese Manufacturing Industry

The growing concern over environmental degradation has pushed firms towards green innovation—technological progress that reduces environmental impact, especially in the manufacturing regime. In this context, appropriability, or the ability of firms to protect and profit from their innovations, particularly green technological innovation, becomes crucial. This paper investigates the role of appropriability in the relationship between green innovation and a firm’s performance and the circumstances in which that effect will be strengthened or lessened. To conduct this study, we examined 618 Chinese manufacturing firms from 2015 to 2021 and found that stronger green innovation appropriability (GIA) leads to better firm performance. Furthermore, that positive effect is superior in discrete technology regimes than in cumulative technology regimes; nonetheless, increasing the shareholding of national institutional investors can intensify GIA’s force. This study contributes to the literature on green innovation management and provides practical insight for Chinese manufacturing firms aiming to pursue sustainable production processes as well as improve their economic performance.