It is of great practical significance for China's economic and social development to explore how to optimize the business environment to promote the inflow of FDI and what impact FDI has on enterprise innovation. Based on the group perspective, fsQCA and PSM research methods were adopted to examine the group effects of different business environment elements on FDI and the impact of different business environment groups on enterprise innovation. It is found that individual business environment elements do not constitute the necessary conditions for high FDI, and that the combination of these elements generates high FDI in a "different way", and that there are four business environment groupings that generate high FDI, namely, innovation-environment-driven, market-humanities-driven, market-government-innovation-driven and integrated-driven. There are three business environment groupings that generate non-high FDI, which are summarised as multi-factor inhibition type and humanistic environment inhibition type. The business environment groupings that generate high FDI and those that generate non-high FDI show asymmetric characteristics.The FDI introduced by the business environment groupings in the developed eastern region can promote local enterprise innovation, the business environment groupings in the central region have different impacts on the innovation of local enterprises, and the business environment groupings in the western region have different impacts on the innovation of local enterprises. In the western region, the FDI introduced by the business environment grouping inhibits the innovation of local enterprises. In the context of the new development pattern of “double cycle”, theoretical guidance for optimizing the business environment to introduce FDI and promote enterprise innovation based on the group perspective is provided.