Does Going Green Pay Off? The Role of Green Innovation and Innovation Ecosystem in Family Business Performance

As environmental technologies change the competitive landscape, businesses are under increasing pressure to pursue green innovation. However, the performance implications of such innovation are still unclear. This study investigates how green innovation impacts firm profitability and the circumstances in which its value is realized, drawing on the resource-based view. We examine the moderating effect of innovation ecosystem participation and the mediating role of green innovation in the relationship between ownership structure and profitability using panel data on innovative SMEs. Focusing on family SMEs as the empirical context, our find- ings show that although family firms are more profitable than non-family counterparts, green innovation neg- atively mediates the family firm–profitability relationship. However, participation in innovation ecosystems strengthens the green innovation–profitability link, mitigating this negative effect. The results show that green innovation is not inherently profitable for family firms alone, but its success depends on external support net- work like the innovation ecosystem.