A Study on the Impact of Client ESG on Supplier Total Factor Productivity: A Knowledge Spillover Perspective

This study examines how client ESG performance affects supplier total factor productivity (TFP) from a knowledge spillover perspective, using matched client–supplier–year data for Chinese A-share listed firms from 2010 to 2023. The results show that client ESG significantly improves supplier TFP; specifically, a one-unit increase in client ESG is associated with an average increase of approximately 8.3% in supplier TFP. These results remain robust across a series of robustness tests. Mechanism analysis indicates that client ESG enhances supplier productivity through three knowledge spillover channels: technical assistance, management sharing, and innovation induction. Heterogeneity analysis further shows that this positive effect is more pronounced in long-term cooperative relationships, among clients with stronger market power, for state-owned suppliers, and when clients and suppliers have aligned ownership structures. Further analysis shows that the positive effect of client ESG persists for at least three fiscal years and is more pronounced in industries characterized by lower volatility. These findings suggest that policymakers and firms should strengthen supply chain ESG governance to promote knowledge spillovers and improve productivity.