Corporate carbon regulation, green innovation and supply chain spillover

Investigating the supply chain spillover effects of carbon regulation is crucial for achieving systemic green transformation. This study empirically examines the impact of carbon regulation on green innovation at different supply chain nodes, utilizing a comprehensive dataset of listed companies from 2010 to 2023. Our findings robustly indicate that carbon regulation significantly enhances green innovation not only in regulated companies but also in their upstream suppliers, providing strong empirical support for the Porter Hypothesis, which posits that stringent environmental regulations can stimulate innovation and improve competitiveness. Mechanism analysis reveals three key pathways: demand expansion, forced linkage, and knowledge spillover, operating from both firm and supplier perspectives. Furthermore, our heterogeneity analysis considers enterprise characteristics, supplier traits, and the differential impacts of carbon regulations between upstream and downstream firms. These results highlight the strategic importance of corporate carbon regulation as a catalyst for green innovation and sustainable supply chain transformation, offering valuable insights for policymakers.