Abstract This study offers valuable insights into the factors underpinning the cultivation of green innovation competitive advantage (GICA) and the stimulation of sustainable innovative firm performance (SIFP). While previous research has predominantly fixated on assessing the financial ramifications of green innovation endeavors, the current discourse of governmental and non‐governmental authorities, has witnessed a surge in discussions surrounding green innovation strategies (GIS) to address climate change. We contend that constructing GICA through innovative products rather than traditional ones poses a formidable challenge. To address this lacuna, our research dissects GIS into three dimensions (i.e., green product, process, and service innovation) to enhance GICA and SIFP. To probe these intricate relationships, we meticulously examined data from 545 Chinese firms, seeking to unravel the complex connections between GIS, GICA, SIFP and moderation of CSR. We constructed a comprehensive model grounded in established theories, resource‐based theory (RBT), and the theory of competitive advantage. Structural equation modeling via SPSS and AMOS was employed to analyze the data rigorously. Our findings unequivocally underscore the pivotal role of GIS in nurturing GICA. As a moderating factor, firms that integrate GIS into their CSR initiatives are strategically positioned to secure a substantial competitive edge. Moreover, the primary impetus for businesses to adopt GIS lies in their pursuit of gaining a competitive edge while concurrently sustaining innovative performance over the long haul. These findings underscore the allure of GIS as an avenue to attain SIFP.
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