Regional Carbon Emissions and Downstream and Upstream Supply Chain Decisions for Firms

Abstract

The supply chain is essential for comprehending the financial behavior and decision-making of firms. Under the macro trend of reducing carbon emissions, there is a close connection between regional carbon emissions and corporate supply chain decisions. However, there exist few researches on the relationship between "regional carbon emissions" and "downstream and upstream supply chain concentration of firms". In view of this, this paper empirically analyses the impact of regional carbon emissions on the decision of downstream and upstream concentrations of firms, using the panel statistics of A-share listed firms in Shenzhen and Shanghai between 2008 and 2020 as the research samples. The findings show that regional carbon emissions have a significant heterogeneous impact on the downstream and upstream supply chain decisions of firms, reducing the upstream concentration of firms but strengthening the downstream concentration of firms. The mechanism analysis illustrates that regional carbon emissions decrease upstream supply chain concentration by forcing local firms to increase green innovation and weaken corporate governance and increase downstream supply chain concentration by raising the financial constraints of local firms. This paper not only enriches the field of research on influencing factors in corporate supply chain decision-making but also serves as a reference for the construction of green supply chains in the background of carbon neutrality, thus having significant practical implications as well as policy implications.