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Promoting suppliers’ R&D investment: The power from climate risk-exposed customers

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  • Xu, Hecong
  • Wang, Xiao

Abstract

This study examines the spillover effects of climate risk on research and development (R&D) within firms’ supply chain relationships. By analyzing global firm data, we demonstrate that downstream customer climate risk significantly increases upstream supplier R&D investment. Specifically, suppliers with greater bargaining power are less easily incentivized by customers, while customers with stronger bargaining power compel suppliers to expand R&D activities to meet their demand for innovative technologies. Closer supplier–customer relationships amplify the effect of customers’ climate risk on suppliers.

Suggested Citation

  • Xu, Hecong & Wang, Xiao, 2025. "Promoting suppliers’ R&D investment: The power from climate risk-exposed customers," Economics Letters, Elsevier, vol. 257(C).
    • Handle: RePEc:eee:ecolet:v:257:y:2025:i:c:s0165176525005063
    DOI: 10.1016/j.econlet.2025.112669
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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