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The factors that drive green innovation investment and exploitation are examined • Economic, institutional, and social factors drive green innovation investment • Green innovation exploitation is driven by institutional and economic factors • Environmental sustainability valuation was not found to affect green innovation

Purpose -The purpose of this paper is to clarify the concept of innovation capability and to show how the linkage between innovation capability and performance measurement can be formed.Design/methodology/approach -The study is based on current literature of innovation capability and performance measurement and matching these two to find out how the measurement of innovation capability should be organized.Findings -The paper describes the concept of innovation capability and presents a performance measurement framework for the measurement of innovation capability and its effects. As a result, a conceptual framework with five perspectives for measuring the relationship between innovation capability and business performance is presented. Also, the link between innovation capability and an organization's business performance is disclosed.Originality/value -The paper shows a way forward of how to define measures of business performance in such a way that they are led from the development of innovation capability.

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