The tone of buyer firms' annual reports and suppliers' green innovation: The spillover effects in the supply chain

Abstract

Grounded in signaling theory, this study explores the effect of the tone of buyer firms' annual reports on suppliers' green innovation and investigates the factors influencing such spillover effects. We use a panel data regression method to analyze 748 paired buyer–supplier firm‐year observations of Chinese listed manufacturing firms from 2010 to 2020. We demonstrate that the tone of buyers' annual reports promotes suppliers' green innovation, showing a spillover effect on the supply chain. Furthermore, the signal strength and effectiveness may be affected by the signal environment. Specifically, buyers' power over suppliers (supply chain environment) and suppliers' industry competition (industry environment) positively moderate the spillover effects of green innovation. This study enriches signaling theory and contributes to the growing literature on green innovation in supply chain management and also provides significant implications for managers.