The effect of supplier digitalization on customer firm emissions

The application of digital technology is a crucial means to achieve low-carbon development goals, with supplier firms' digital transformation driving supply chain optimization as a key pathway to this goal. This study systematically examines the forward spillover effects of supplier firms' digital transformation. Using panel data from A-share listed companies in China over the period 2007-2022, we focus on vertical supply chain linkages. The results indicate that supplier firms' digital transformation significantly reduces customer firms' environmental pollution emissions, a conclusion that remains robust across various tests. Moreover, we find that this effect is asymmetric: it is significantly stronger when suppliers' digitalization levels exceed those of their customers. Heterogeneity analysis shows that the pollution-reduction effect is stronger when customer firms are located in regions with lower resource endowments, have higher supply-chain dependence, operate in non-heavy-pollution industries, or are non-state-owned enterprises. Mechanism analysis demonstrates that supplier digitalization achieves these gains by enhancing green technological innovation and increasing external stakeholder attention. The findings provide a foundation for fully leveraging the environmental potential of digital transformation within supply chains and offer important insights into advancing supply chain modernization and promoting green, high-quality development.