Linking Industry 4.0 Adoption and Eco‐Innovation to Green Firm Performance: The Role of Servitization and Absorptive Capability Across Industry Types

ABSTRACT This research examines the impact of green servitization, Industry 4.0 adoption, absorptive capacity and eco‐innovation capability on green firm performance in the Chinese manufacturing sector, a crucial yet underexplored context due to its significant environmental influence because of rapid industrialization. The data was collected from 450 mid to senior‐level managers in Chinese manufacturing firms, and it was analyzed using partial least squares structural equation modeling (PLS‐SEM). The outcomes show that both green servitization and digital transformation positively impacted eco‐innovation and absorptive capabilities, significantly improving green firm performance. Eco‐innovation capability emerged as a stronger mediator than absorptive capacity, and the interconnection between green servitization and Industry 4.0 shows a novel integration of digital and green strategies that extend dynamic capabilities theory. However, the moderating role of industry type was insignificant; high‐tech firms showed greater capability development. The research contributed by examining a moderated mediation model that connects green servitization, digital transformation, and sustainability outcomes in an emerging economy, offering actionable insights for firms and policy makers for achieving competitive and sustainable performance through integrated environmental and technological strategies.