Not all voices are equal: stakeholder environmental pressures and corporate green innovation strategies

Abstract

Whether firms adopt differentiated green innovation strategies in response to varying stakeholder environmental pressures has become a pressing question. This study examines how green investors and the public shape firms’ green innovation strategies based on stakeholder salience and stakeholder-agency theories. Using a sample of Chinese A-share listed firms, green innovation is categorized into source-prevention and end-of-pipe types based on pollution treatment approaches. The results show that green investors promote source-prevention innovation, whereas public environmental attention drives end-of-pipe innovation. This disparity stems from green investors’ ability to raise managerial environmental awareness, alleviate managerial myopia, and improve cash flow—capacities that the public lacks. Additionally, internal characteristics and the external environment influence firms’ responses to stakeholder pressures. Further analysis reveals that source-prevention innovation improves financial and environmental performance, while end-of-pipe innovation primarily enhances social performance. Overall, these findings suggest that firms adjust green innovation strategies based on perceived stakeholder salience.