Abstract
Abstract
Modern firms face the dual challenge of harmonizing financial objectives with environmental responsibilities. While green innovation has emerged as a critical strategic response, specifically through green process innovation, its impact on financial performance remains theoretically and empirically contested. This study investigates the boundary conditions of this relationship by examining the moderating effects of green product innovation and stakeholder concerns. The empirical analysis utilizes a panel dataset comprising 1,450 firm-year observations from 145 publicly listed manufacturing companies in Taiwan (2014–2023), sourced from corporate sustainability reports. The results reveal that green process innovation has a significantly negative impact on financial performance in the subsequent year, suggesting immediate cost burdens. However, this relationship shifts from negative to positive when firms concurrently engage in green product innovation or address high levels of stakeholder concerns. These findings suggest that the financial viability of green process improvements depends on a holistic innovation strategy and proactive stakeholder engagement. This study provides actionable insights for managers designing sustainability roadmaps, policymakers crafting environmental regulations, and investors evaluating long-term corporate value.