How does green innovation affect supplier-customer relationships? A study on customer and relationship contingencies

As the demand for eco-friendly products arises, many suppliers have devoted significant effort to green innovation. Prior studies have investigated how green innovation influences product and firm performance; however, its influence on the relationship between suppliers and organizational buyers (customers) is still unknown. Organizational buyers' receptivity to green products is uncertain as they must adjust their current systems to accommodate the new products. As such, understanding how supplier green innovation effort affects the supplier-customer relationship is essential for green innovation success. Using data collected from 196 B2B customers, we find that the relationship between supplier green innovation effort and relational performance depends on several customer- and relationship-level contingencies. Specifically, green innovation benefits a relationship more if customer participation and relational embeddedness are high, or if customer risk aversion and customer-perceived product criticality are low. This research provides valuable guidance for the effective implementation of green innovation.