When stability becomes a liability: the negative effects of supplier network stability on green innovation diversity and quality

Purpose Drawing on the network embeddedness perspective, this study aims to investigate how supplier network stability affects two distinct facets of green innovation – diversity and quality – and how these relationships are moderated by absorptive capacity. Design/methodology/approach The proposed relationships are tested using ordinary least squares regression based on a sample of 1,655 firm-year observations from 577 Chinese publicly listed firms over the period 2009–2023. To address potential endogeneity and selection bias, we conduct a series of analyses. Findings We find that supplier network stability is detrimental to both green innovation diversity and green innovation quality. Furthermore, absorptive capacity plays a differential moderating role, alleviating the detrimental influence of supplier network stability on green innovation quality while having no significant moderating effect on green innovation diversity. Originality/value By integrating the network embeddedness perspective with the green innovation literature, this study uncovers the unintended consequences of supplier network stability for green innovation diversity and quality and underscores the important role of absorptive capacity in mitigating these adverse effects.