From Complaints to Cleaner Production: How Public Environmental Complaints Stimulate Corporate Green Innovation

ABSTRACT Public environmental complaints are increasingly used as a mechanism of social monitoring in environmental governance, yet their role in shaping firms' strategic behaviors and responses, particularly green innovation, remains insufficiently understood. Existing studies largely focus on macro‐level governance outcomes or assume uniform regulatory enforcement, leaving limited insight into why and how public complaints influence private firms' green innovation. Drawing on the signaling theory and resource‐based view, this study examines how environmental complaints influence green innovation among 5493 Chinese private enterprises, employing econometric analyses and a difference‐in‐differences (DID) approach. Results reveal that environmental complaints significantly stimulate green innovation, primarily through the mediating roles of government supervision and public opinion pressure. However, firms with abundant resources and strong political connections show reduced responsiveness to such complaints, highlighting governance challenges. This research extends the understanding of the interplay between social accountability and corporate green innovation. It underscores the need for robust complaint mechanisms and stricter regulatory enforcement, particularly for politically connected firms, while encouraging enterprises to address community grievances as a strategic pathway to sustainability and cleaner production.