To explore or exploit for legitimacy: The effect of retail investor environmental concern on corporate green technological innovation

This study examines the impact of retail investor environmental concern (RIEC) on corporate exploratory and exploitative green technological innovation (GTI) within a theoretical underpinning centred on organisational legitimacy. The study posits that firms encountering an increased RIEC will encounter heightened environmental legitimacy pressure, facilitating their GTI participation. The cost-effectiveness of gaining legitimacy and the significance of breakthrough outcomes in proving environmental governance determination may lead firms to participate in both exploitative and exploratory GTI. Moreover, firms in competitive industries are anticipated to be more sensitive to legitimacy pressure from RIEC, thereby participating more in GTI. This study further argues that exploratory GTI holds greater potential in proving legitimacy and distinguishing firms from competitors. Thus, the impact of industry competitive intensity is more pronounced in enhancing the association between RIEC and exploratory GTI instead of exploitative GTI. Utilising a sample of 995 firms listed on the Chinese A-share market during 2010–2022, this study proposes a text-based measure of RIEC and validates the above conjecture. The findings provide valuable implications for stakeholders seeking to utilise RIEC in managing corporate GTI.