Lessons from failure: Pollution blacklisting and firm's green innovation

This article investigates the impact of pollution blacklisting on firm green innovation (GI) by a unique information disclosure project from 782 Chinese listed firms in heavily polluting industries during 2015–2019. Our research found that pollution blacklisting establishes a poor environmental perception and puts firms under greater legitimacy pressure than their peers, forcing them to go beyond compliance through more substantial long‐term solutions like GI to reestablish environmental legitimacy and win social support again. For firms with high levels of media coverage, the positive effect of pollution blacklisting on GI is strengthened, while for firms with bureaucratic political connections, the positive effect is weakened. The findings have important theoretical and practical implications for GI management and relevant information disclosure practice.