Environmental Background Officials and Focal Firms' Green Innovation: New Perspectives of Supply Chain Geography

ABSTRACT Based on resource dependence theory (RDT), this study focuses on the impact of the geographical positioning of environmental background officials in a supply chain on focal firms' green innovation. We argue that officials' spatial locations, rather than merely their environmental expertise, influence the dependence between firms and governmental authorities. We differentiate between unidirectional dependencies and reliance of firms in provinces of suppliers and customers, and bidirectional dependencies corresponding to mutual reliance of firms and local officials. The empirical findings indicate that the local officials in the suppliers' and customers' provinces are active proponents of green innovation: the upstream officials ease the access to green raw materials, and the downstream officials impose on the goods and services procurement the green standards. However, local officials have a lesser effect because of the economic reliance in the local firms. Heterogeneity analyses reveal stronger effects in high‐pollution industries, private firms, and regions with higher institutional quality, highlighting boundary conditions of the mechanism. Additional analyses indicate that officials' political origins matter: centrally rotated officials have the most positive impacts, then there are inter‐provincial rotations, followed by the least powerful impacts of locally promoted officials.