Corporate venture capital (CVC) plays a pivotal role in driving innovation. Our study offers compelling evidence that integrating sustainability into CVC strategies benefits not only the environment but also enhances long-term financial performance. Through CVC programs, corporate parents innovate by creating and executing new business models, leveraging both incremental and radical innovation. The concept of “innovation compensation” serves as a catalyst for encouraging corporations to adopt ecologically sustainable practices.

Our research investigates the influence of green innovation and environmental performance on the long-term success of U.S. CVC parent firms. Furthermore, we examine how corporate social responsibility (CSR) functions as a critical intermediary in this relationship.