Can green process innovation improve both financial and environmental performance? The roles of TMT heterogeneity and ownership

The overuse of natural resources has caused many environmental concerns. Green process innovation (GPI) has been seen as an effective solution that can benefit both industry and society. However, prior studies have not fully examined the contingent mechanisms of the relationship between GPI and both environmental and financial performance. This study fills this research gap. Using the data of 172 manufacturing firms (including 104 state-owned and 68 non-state-owned manufacturing firms) in China, this work investigates the impacts of GPI on both environmental and financial performance, with a particular focus on the moderating roles of top management team (TMT) heterogeneity and firm ownership. The results present valuable findings. First, we found that GPI has a significant positive effect on firms' environmental performance. We also show that although GPI does not improve firms' financial performance significantly in the short term, additional analysis demonstrated that three-year-lagged GPI does indeed have a positive effect on firms' financial performance. Second, we established that strong TMT heterogeneity enhances the link between GPI and firms' environmental and financial performance. Third, we revealed that the relationship between GPI and firms' financial performance is enhanced for stateIowned enterprises (SOEs), but, surprisingly, that the link is weakened for SOEs. Overall, the findings of this study present new implications for academics, managers, and policymakers, as they uncover the impacts of GPI on environmental and financial performance by leveraging levels of TMT heterogeneity and firms' ownership status.