Gone with chain: research on the ESG spillover effects of state-owned equity participation in private enterprises

Purpose An ESG-driven business philosophy is increasingly being adopted by companies. Existing research has primarily focused on the direct impact of state-owned equity participation (SOEP) on the ESG performance of private enterprises, while largely neglecting the potential spillover effects that may arise through supply chain connections. Design/methodology/approach Utilizing data from Chinese A-share listed private enterprises and their top five suppliers and customers from 2009 to 2023, this article employs a fixed effects model to investigate the impact of SOEP on the ESG performance of upstream and downstream enterprises within the supply chains of private enterprises (UDPE). Findings The results reveal that SOEP significantly improves the ESG performance of UDPE, a finding that remains robust after multiple tests and the exclusion of potential greenwashing samples. Mechanism analysis reveals that reliable supply-demand linkages and streamlined supply-demand balancing at the supply chain level, along with alleviating financing constraints and promoting technology spillovers at the enterprise level, are the primary channels through which SOEP exerts its ESG spillover effects. Moderation effect tests indicate that the supply chain centrality and structural holes of private enterprises enhance the ESG spillover effects of SOEP. Heterogeneity analysis reveals that the ESG spillover effects of SOEP are strengthened when upstream and downstream firms operate in favorable external institutional environments and are geographically proximate to private enterprises. Originality/value This study extends research on the economic consequences of SOEP beyond private enterprises to their upstream and downstream supply chain partners. It further underscores the leading, supporting and driving role of state-owned enterprises within the broader supply ecosystem.