Green Innovation Sustainability: How Green Market Orientation and Absorptive Capacity Matter?

Although there has been much research into green innovation, limited studies focus on the influence of internal factors on green innovation. This paper investigates whether and how two internal factors, such as green market orientation and absorptive capacity, facilitate green innovation. By dividing green innovation into green product innovation and process innovation, we also test the differential effects of the two internal factors on green product innovation and process innovation. Using a survey of 262 manufacturing firms in China, our results show that green market orientation improves only green product innovation, not green process innovation, whereas green absorptive capacity improves green product innovation and process innovation simultaneously. Green market orientation (green absorptive capacity) has a stronger impact on green product (process) innovation than on green process (product) innovation. Further, we find that a positive interaction effect of green market orientation and absorptive capacity on green product innovation and process innovation is significant. The findings contribute to the green innovation literature by providing an integrated framework for exploring whether the pursuit of green market intelligence and technological knowledge improves green product innovation and process innovation.