The Influence of Customer ESG Performance on Supplier Green Innovation Efficiency: A Supply Chain Perspective

Shengen Huang, Yalian Zhang (), Tianji Cheng and Xin Guo
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Shengen Huang: School of Economics and Management, Central South University of Forestry and Technology, Changsha 410004, China
Yalian Zhang: School of Economics and Management, Central South University of Forestry and Technology, Changsha 410004, China
Tianji Cheng: School of Economics and Management, Central South University of Forestry and Technology, Changsha 410004, China
Xin Guo: School of Business and Creative Industries, University of the West of Scotland, Paisley PA1 2BE, UK

Sustainability, 2025, vol. 17, issue 12, 1-27

Abstract: The present study examines the impact of customer firms’ environmental, social, and governance (ESG) performance on suppliers’ green innovation efficiency, grounded in stakeholder theory and innovation diffusion theory. The DEA-SBM model is employed to measure green innovation efficiency and analyze transmission mechanisms through knowledge spillovers, financing constraints, and the moderating roles of executives’ green cognition and digitization. This analysis is based on panel data from 3134 customer–supplier pairs of China’s A-share listed firms from 2014 to 2023. The findings indicate that high ESG performance by customer firms has a substantial impact on suppliers’ green innovation efficiency, with a 1% increase in customer ESG score resulting in a 1.38% improvement in supplier efficiency. The phenomenon under scrutiny is hypothesized to be precipitated by knowledge spillovers and mitigated by reduced financing constraints. The hypothesis further posits that supplier firm executives’ green cognition and customer digitization will amplify the effect. A heterogeneity analysis reveals stronger effects in technology-intensive firms and regions with higher governmental environmental oversight. These findings underscore the pivotal function of ESG-driven supply chain collaboration in propelling sustainable industrialization. It is imperative that policymakers prioritize cross-regional ESG benchmarking and digital infrastructure to amplify green spillovers. Conversely, firms must integrate ESG metrics into supplier evaluation systems and foster executive training on sustainability. This research provides empirical evidence for the optimization of green innovation policies and the achievement of China’s dual carbon goals through the coordination of supply chain governance.

Keywords: ESG performance; green innovation efficiency; knowledge spillovers; financing constraints; supply chain management; digitization (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2025
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