How does performance feedback affect green innovation in enterprises?

Purpose Green innovation serves as a pivotal strategy to achieve a win-win situation between economic development and environmental protection. While performance feedback plays a crucial role in strategic decision-making, its influence on green innovation decisions remains unclear. This paper aims to explore the impact and contextual mechanisms of different performance feedback states on green innovation. Design/methodology/approach The analysis was conducted using a two-way fixed effects regression model based on panel data from Chinese listed manufacturing firms spanning the period from 2010 to 2021. Findings The results revealed that performance feedback significantly affected green innovation. Specifically, performance deficit exhibited an inverted U-shaped relationship with both the quantity and quality of enterprise green innovation, while performance surplus demonstrated a U-shaped relationship. Furthermore, government subsidy played a significant, moderating positive role in the relationship between the two. Originality/value Drawing on the BTF and DCT, this paper provides new insight into how different performance feedback states shape green innovation. This paper contributes to the BTF and DCT literature.