Supply chain network centrality and green innovation: Evidence from Chinese listed companies

This study examines how green innovation spreads across supply chain networks by focusing on peer effects. Using panel data from Chinese listed companies spanning 2009–2022, we develop a model incorporating rational attention allocation and external legitimacy pressure to endogenously determine firms’ imitation targets. We estimate a constant elasticity of substitution (CES) peer effects model using the generalized method of moments (GMM), which allows us to identify the direction of convergence and decompose peer effects into spillover and conformity components. The results reveal evidence of upward convergence whereby firms tend to imitate peers with more advanced green innovation performance. This process is primarily driven by active learning rather than passive pressure. Mechanism analysis demonstrates that market competition, institutional legitimacy, and information transparency jointly shape the strength of peer responses. Based on these findings, we propose improving public funding efficiency with a welfare-based subsidy strategy that targets firms with high marginal improvement potential and strong network spillovers. These findings offer new insights into how green innovation diffuses through supply chains and provide practical tools for more effective environmental policymaking.