Digitalization and supplier environmental performance: An institutional perspective

Abstract

In response to increasing calls for new insights into green supply chain management, we examine the impact of focal firm digitalization on supplier environmental performance. Drawing on institutional theory, we further investigate the moderating effects of three dimensions of institutional pressures faced by focal firms. Utilizing a large-scale dyadic panel dataset comprising 26,954 focal firm-supplier-year observations in China between 2011 and 2022, we employ a two-way cluster-robust standard error estimation to conduct the analysis. Our findings reveal that focal firm digitalization has a positive effect on supplier environmental performance. This effect is more pronounced when focal firms are subject to stronger institutional pressures from external institutional contexts, specifically coercive, mimetic, and normative pressures, proxied by legal system development, industry competition, and overseas sales, respectively. Overall, this study provides novel theoretical and practical insights into how digitalization enhances supplier environmental performance and highlights the key factors influencing its effectiveness.