Supply-Chain Transmission of Environmental Policy Pressure and Suppliers’ External Green Technology Acquisition: Evidence from China

Abstract

Using 1135 customer–supplier–year observations involving Chinese A-share listed firms and their major suppliers from 2011 to 2023, together with prefecture-level government work reports and patent-assignment records, we examine whether environmental policy pressure faced by downstream customers shapes upstream suppliers’ external green technology acquisition. External green technology acquisition is measured as the log-transformed annual number of green patents assigned to each supplier. We find that suppliers acquire more external green patents when their customers face stronger local environmental policy pressure, with a one-standard-deviation increase in policy intensity associated with approximately 5.7% higher external green patent acquisition. The result is robust to placebo tests, alternative measures, and PPML estimation, while instrumental-variable estimates point in the same direction. Further analyses document stronger customer green-transition urgency and supplier-perceived supply-chain uncertainty under greater downstream policy intensity, and they show that the relationship is stronger among suppliers with weaker bargaining power or lower R&D intensity. Environment-related policy intensity is more strongly associated with end-of-pipe technology acquisition, whereas energy-transition and market-incentive policy intensity are more strongly associated with source-control technology acquisition. Overall, the findings indicate that environmental policy intensity in downstream customers’ cities is associated with upstream suppliers’ external green technology acquisition within observed customer–supplier relationships.