The aim of this study is to find out the effect of firm innovation activities on different firm’s performance measures and how different firm life cycle stages and market competition derives this relationship.The data of Chinese A-listed firms is collected from the CSMAR(Chinese Securities Market and Accounting Research)database for the period from 2007 to 2015.China is an emerging economy and the competitive nature of the firms listed on the Shanghai stock exchange(SSE),and Shenzhen stock exchange(SZSE),the survivor of the companies come through innovativeness.The OLS regression analysis was run for the estimation purposes.The regression analysis shows as a positive and significant effect of all the innovation proxies with the Return on Assets(ROA)and Tobin’s Q(TQ).Following Anthony&Ramesh(1992)and Black(1998),this study divides the firms into three life cycle stages namely growth stage,mature stage and stagnant stage.The firms in the growth stage are expanding since they are incurring more capital expenditures,pays less dividend,experience higher sales growth and are young in terms of listings.These growth firms are more inclined to increase the market shares which leads to more innovativeness as compared to the firms in the mature stage and the stagnant stage.The study proposes that the innovation and firm performance relationship varies across different life cycle stages.The results show a positive and significant effect of innovation on the firm book and market performance in the growth stage and maturity stage.The study does not find any significant innovation-performance relationship in the stagnant stage.The coefficients reported at the growth stage are higher as compared to the mature stage which signifies that the impact of innovation at the growth stage on the firm performance is more pronounced as compared to the other two stages.The results are robust with alternative measures of firm performance and innovation.The study concludes that the innovation leads to firm performance and this effect varies across different life cycle stages.From the regression results,it is concluded that the innovation activities are an important determinant of the Chinese A-listed firm’s performance.The results are in line with Gunday et al.,(2011),Rosenbusch,Brinckmann,&Bausch(2011)and Camison&Villar-Lopez(2014)who also found a positive association between innovativeness and the firm performance measures.Product Market Competition(PMC)is regarded as an effective external governance mechanism,and the firms in competitive industries are more encouraged to innovate for their survival.The product market competition may also affect the innovation-performance relationship based on the life cycle stage of the firms.The study hypothesizes that the effect of PMC on innovation-performance relationship varies across life cycle stages.The results show a positive and significant moderating effect of PMC on the relationship between the different measures of innovation and the book and market performance measures.The moderating effect of PMC is more prominent in the growth stage as compared to the maturity stages.The market responds negatively to the innovation when the firm is in the stagnant stage.The study results are robust by alternative measures of innovation and performance.The research findings support the fact that innovation strategy is an important major driver of firm performance and should be developed and executed as an integral part of the business strategy.Managers should recognize and manage the innovations to boost their operational performance.Firms that are endowed with resources to improve their innovative capabilities could expect a more significant improvement on their production and market performance.