Can supply chain digital innovation policy improve the sustainable development performance of manufacturing companies?

As societal concerns around environmental protection, and corporate governance are increasing, entities like consumers, investors, and others are raising their expectations of companies’ corporate social responsibility. Companies that pursue sustainable development goals will receive more attention and support from these stakeholders. The pilot policy for supply chain innovation and application (SCIA) is a systemic experiment launched by the Chinese government that aims to facilitate the digitalization of supply chains and encourage companies to adopt innovative technological methods to optimize traditional supply chain management practices. Based on data from 508 manufacturing companies from 2013 to 2022, this research utilizes SCIA in the framework of a quasi-natural experiment, employing research methods DID, EM, PSM-DID, and SDID to evaluate the effect of the SCIA on SDP. Through empirical evidence, it concludes that the rollout or enforcement of the SCIA pilot policy significantly promotes SDP. SCIA impacts corporate sustainable development by increasing their intention to invest in innovation, ensuring the sustainability of corporate innovation, and reducing company cost expenditures. There is significant heterogeneity in the effectiveness of establishing pilot cities for the digitization and application of supply chain innovations: the pilot policy can significantly promote the SDP of state-owned enterprises; compared to small-scale companies, the SDP of large companies has been significantly improved due to the pilot policy; SCIA pilot policies have a greater impact on SDP of low agency cost companies than high agency cost companies; and companies located in cities with a high degree of digitalization are more favorable impacts from the pilot policy. Companies with weak monopoly power have a more significant improvement in SDP. The study enriches the research on the effectiveness of SCIA pilot policies and provides insights into how local governments can facilitate the enhancement of the SDP of manufacturing companies.