Sustainable Innovation and Impact on Triple Bottom Line Performance: Are Innovation Types Simple Mediators?

ABSTRACT This study investigates the way sustainable innovation, conceptualized as a second‐order construct integrating sustainable orientation and innovation culture, impacts triple bottom line (TBL) performance. It also examines the mediating roles of product, process, organizational, and marketing innovations. Data from 404 manufacturing firms were analyzed using partial least squares structural equation modeling (PLS‐SEM). Empirical findings show that sustainable innovation drives all four types of innovation, and these innovation types have also positive effects on TBL outcomes. Interestingly, the results also reveal an inverted U‐shaped effect between sustainable innovation and multiple innovation types (product, process, and organizational), indicating that although sustainable innovation enhances performance through multiple innovation types, excessive emphasis may lead to diminishing returns and resource inefficiencies. The study contributes theoretically to the literature in innovation and sustainability by framing sustainable innovation as multidimensional and identifying mediating pathways to performance, while highlighting boundary conditions through the “too‐much‐of‐a‐good‐thing” effect. From a practical standpoint, the findings suggest that managers should monitor for signs of overextension in sustainability‐driven innovation efforts, while policymakers should design balanced sustainability policies that avoid excessive regulatory pressure and unintended compliance burdens.