ESG peer spillover effect in supply chain: Evidence from Taiwan semiconductor industry

Abstract

In this study, we collected data from 271 semiconductor companies listed on the Taiwan Stock Exchange from 2015 to 2020 to determine whether environmental, social, and governance (ESG) spillovers propagate along supply chains through horizontal peers and vertical upstream, midstream, and downstream sectors. The results indicate the presence of a horizontal peer spillover effect that was more significant in the upstream industries than in the midstream and downstream industries. In addition, the forward industry (customers) had a positive vertical spillover effect on the backward industry (suppliers). We also identified a significant moderating effect from high-revenue linkages but not from high-cost linkages. Taken together, these findings indicate that through network linkages, Taiwan's semiconductor supply chain has a vertical spillover effect on the environmental pillar of ESG scores.