Green innovation rapidly changes the competitive landscape to achieve environmental sustainability while enhancing firm performance. While scholars have discussed the drivers of a firm's green innovation performance, the literature has been silent on how a buyer's green innovation may influence its suppliers from a dyadic perspective. Through the lens of social contagion theory, we investigate how a buyer's green innovation influences its supplier's green innovation and the moderating effect of supply chain dependence on this relationship.
Utilizing a unique sample of 636 dyadic relationships, we empirically test the relationship between the buyer's green innovation and its supplier's green innovation by using linear regression with high-dimensional fixed effects.
Our study reflects that the buyer's green innovation significantly impacts the supplier's green innovation. Moreover, such a relationship is contingent on their dependence structure, which we conceptualized as supply chain dependence. Specifically, the moderating effect of supplier dependence on the relationship between the buyer's and supplier's green innovation is positive.
This study highlights the importance of dyadic relationships and dependence structures in the process of green contagion in supply chain and helps scholars and managers to better understand the power dynamics in pursuit of green innovation and sustainable operations.
