This paper investigates the heterogeneous responses to institutional investor ESG activism by expanding reference point theory among non-family firms and family firms with different intergenerational contexts. Using a Chinese family firm database comprising 14,425 observations from 2012 to 2020, this study finds that institutional investor ESG activism is more likely to stimulate exploratory green innovation in family firms than in non-family firms. Such linkage between institutional investor ESG activism and exploratory green innovation is stronger in second-generation family firms than in first-generation firms. Furthermore, this study explores the moderating roles of family involvement and financial slack in first- and second-generation family firms as they respond to institutional investor ESG activism. Specifically, both family involvement and financial slack can enhance the positive impact of institutional investor ESG activism on exploratory green innovation in the context of second-generation family firms. The moderating effect of family involvement is not significant, whereas the moderating effect of financial slack turns into be negative in the context of first-generation family firms. Our study highlights the heterogeneous responses to institutional investor ESG activism of family firms with different intergenerational contexts.