Green exploitation and exploration innovation as responses to environmental performance shortfalls: integration of performance feedback, threat-rigidity and ambidexterity perspectives

Purpose Building on performance feedback and threat-rigidity theories, this study aims to argue that environmental performance shortfalls are powerful motivators for shaping green innovation strategies. To examine our argument, this study extends the theoretical logic to organizational ambidexterity and examines green exploitation and exploration innovation and relative green ambidexterity as organizational responses to environmental performance shortfalls. This study addresses how environmental performance shortfalls affect the implementation of green exploitation and exploration innovation and relative green ambidexterity and how this chosen green innovation strategy affects corporate environmental performance. Design/methodology/approach The authors test their theory using 145 sample firms’ environmental performance data spanning 2015 to 2021 and conduct a content analysis of their 697 sustainability reports spanning 2017 to 2021. Findings This paper finds that environmental performance shortfalls positively affect green exploitation innovation and relative green exploitation innovation and negatively affect green exploration innovation and relative green exploration innovation. It also finds that green exploration innovation and relative green exploration innovation positively affect environmental performance but that green exploitation innovation and relative green exploitation innovation negatively affect environmental performance. Originality/value The findings support the premise that environmental performance feedback guides the direction of strategic choices and actions related to green innovation and confirm the decisive role of green exploration innovation in improving environmental performance. This study augments performance feedback, threat-rigidity and organizational ambidexterity theories in the environmental management context.