Induced green innovation of suppliers: The “green power” from major customers

In the context of green development, the major challenge is to incentivize companies as key players to participate in green innovation. This paper focuses on the market incentive mechanism for green innovation to investigate whether major customers with green development concepts can enhance the green innovation of upstream suppliers, which means the "green power" from major customers. The research is based on paired data of Chinese A-share listed companies and their major clients from 2009 to 2018. The findings show that: (1) Major customers with green development concepts can enhance the green innovation of upstream suppliers, and this conclusion remains robust after a series of tests. (2) The study also identifies the influence mechanisms, which include: (a increasing the purchase amount to green suppliers, and (b providing green innovation-related resource support to upstream suppliers. (3) Heterogeneity analysis shows that major customers with green development concepts can significantly drive the green innovation of private and smaller suppliers to a greater extent. (4) The induced green innovation of suppliers from major accounts is more significant in samples with high customer concentration. This research identifies the "green power" from major customers as an important market mechanism for incentivizing green innovation. The conclusions of this paper will lead to some policy implications for the promotion of green innovation and the construction of green supply chains.