Modern corporations are faced with many environmental challenges and pressures. Managers of firms have realized that green innovation is an important factor in sustainable development and that it can offer a competitive advantage. This study uses organizational identity and organizational creativity theory to create a theoretical framework for understanding green innovation strategy. The results indicated that green innovation strategy positively influences both green organizational identity and green creativity. Positive relationships are found between green organizational identity and green creativity, and green creativity positively affects green innovation. In addition, we find that green organizational identity partially mediates the relationship between green innovation strategy and green creativity. We also find that green organizational identity fully mediates the relationship between green innovation strategy and green innovation, which means that green innovation strategy does not directly influence green innovation but indirectly stimulates such innovation via green organizational identity. These results suggest that managers should seek to enhance their organizations' sense of green identity and to encourage green creativity, as this will enhance their firm's capability of sustainable development. The theoretical and practical implications of these findings are also discussed. Copyright © 2017 John Wiley & Sons, Ltd and ERP Environment