Article
Exploring the Role of Green Innovation and Corporate Governance in Enhancing Firm Performance Evidence from the Green Industry
Green innovation has become increasingly important for firms seeking to improve economic performance while addressing environmental challenges. This study examines the effect of green innovation on firm performance and investigates whether ESG performance affects green-industry companies. Using panel data for 93 companies identified through the NIFTY ESG 100 Index over 2019–2026, the study employs correlation analysis and panel regression models. Green innovation is measured through a Green Innovation Adoption Index comprising five green-practice indicators, while firm performance is assessed through Current Ratio, Debt Equity Ratio, Turnover Ratio, ROA, and Tobin’s Q. Governance characteristics include Board Diversity, Women Director Proportion, Independent Director Proportion, and Board Size. The results show that green innovation significantly improves operational efficiency and reduces financial leverage, whereas its effects on liquidity, profitability, and market performance are statistically insignificant in the preferred panel models. The analysis of individual green practices further shows heterogeneous effects across performance dimensions. Governance characteristics also moderate selected green innovation–performance relationships: Board Diversity strengthens the leverage effect, Women Director Proportion strengthens the efficiency effect, while Board Size weakens the profitability effect. ESG Score does not significantly moderate the relationships. The study demonstrates that the financial value of green innovation is conditional on both the type of green practice and governance structure.