The Mediating Role of Green Innovation in Corporate Governance and Firm Performance

Abstract

This study explores the relationship between corporate governance, green innovation, and firm performance within the context of modern business challenges that demand efficiency, transparency, and sustainability. Using a library research approach, this paper reviews relevant literature published last five years to provide a comprehensive understanding of the dynamics between board size, independent commissioners, and ownership concentration in influencing firm performance, both directly and indirectly. The findings reveal that corporate governance mechanisms can enhance transparency and monitoring effectiveness, but their influence on firm performance remains inconsistent due to contextual factors such as regulatory environment and ownership structures. Meanwhile, green innovation emerges as a strategic tool that not only improves environmental performance but also contributes to financial stability and competitive advantage. More importantly, green innovation acts as a mediating variable that strengthens the positive relationship between corporate governance and firm performance, particularly in the manufacturing sector. This study contributes to the academic discourse by addressing research gaps and provides practical implications for firms seeking to integrate governance and sustainability strategies.