Blazing the trail to circularity: how innovation ecosystems and ambidextrous green innovation drive net-zero based green performance in SMEs

Purpose As the race toward net-zero intensifies, manufacturing firms are rethinking how innovation can serve as a catalyst for sustainable transformation. This study explores how ambidextrous green innovation, integrating both exploratory and exploitative innovation strategies enables small- and medium-sized enterprises (SMEs) to achieve net-zero based green performance. Drawing on dynamic capabilities theory, the study constructs and empirically tests a conceptual framework that connects innovation ecosystem engagement, innovation capability and ambidextrous green innovation. It further examines how the broader innovation ecological environment enhances these relationships and supports sustainability outcomes. Design/methodology/approach Data were gathered through a three-wave, time-lagged survey from Chinese manufacturing SMEs. The proposed hypotheses were tested using Hayes’ PROCESS macro, allowing for robust analysis of both mediation and moderation effects. Findings The results confirm that strong collaborative linkages with core organizations and service intermediaries significantly enhance innovation capabilities. Moreover, a supportive innovation ecological environment strengthens the influence of innovation capability on ambidextrous green innovation. In turn, ambidextrous green innovation contributes positively to net-zero based green performance. Originality/value This study provides a novel theoretical integration by linking innovation ecosystem, innovation capability and ambidextrous green innovation within the framework of dynamic capabilities theory. It extends the literature by empirically demonstrating how these constructs jointly influence net-zero based green performance in SMEs. Additionally, it highlights the contextual importance of the innovation ecological environment in strengthening the pathway from innovation capability to ambidextrous green innovation, offering valuable insights for both theory and managerial practice in sustainability-driven innovation.