With the rapid development of digital technologies and increasing public attention on environmental problems, it has become a new challenge for global enterprises to manage supply chains responsibly, so as to improve their innovation performance for sustainability. Prior works have identified the effects of supply chain integration on firm innovation in advanced economies; however, so far, there has been limited research on the relationships between supply chain integration and firm innovation in emerging and developing countries. Hence, building upon transaction cost and resource dependence theories, this study used China’s manufacturing industry as the research setting, probing the dynamic mechanisms between supply chain integration and firm innovation. The results show that the degree of supply chain integration positively relates to firms’ patent output but negatively relates to their innovation efficiency, and that a sustainable policy moderates the foregoing associations. Our study enriches the body of knowledge regarding responsible supply chain integration in a new digital age with growing ecological concerns and thereby offers insightful practical implications for practitioners and policy makers.

Green innovation has been an important approach for firms to achieve sustainable development in recent years; however, empirical studies on the relationship between green innovation and corporate performance have delivered mixed results. In particular, business groups (BG), which are a critical organizational form in many economies and are proven to have unique advantages for conducting green innovation, have attracted less scholarly attention. Therefore, in this study, we adopt the perspective of a business group and investigate how green innovation by BG-affiliated firms affects their financial performance, and we also explore the moderating effect of BG’s internal supply chain partnership. Based on a sample of 202 listed manufacturing enterprises in China from 2013 and 2017, the research results show that green innovation significantly improves the financial performance of firms, and this positive effect is more prominent in BG-affiliated firms than in non-BG firms. Further research found that BG-affiliated firms’ supply chain (suppliers and customers) concentration and trust positively moderate the relationship between green innovation and financial performance. This research concerns the particularity of business groups’ green innovation practices in China, which not only contributes to the research on the effect of BG’s green innovation on corporate performance in an emerging market context but also deepens our understanding of the role of its internal supply chain partnership from the perspective of concentration and trust.