A Study on the Impact of Environmental Penalties on Corporate Supply Chain Resilience

Against the backdrop of increasingly stringent environmental regulation and increasing uncertainty in supply chain operations, this study examines how environmental penalties affect corporate supply chain resilience. Using Chinese A-share listed firms from 2009 to 2024, this paper constructs a firm-level panel dataset and employs a two-way fixed-effects model to estimate the relationship between environmental penalty intensity and supply chain resilience. Environmental penalty intensity is measured by the annual penalty amount imposed on each firm, while supply chain resilience is captured through an entropy-weighted index reflecting both resistance and recovery capacities. To alleviate endogeneity concerns, this study further uses an instrumental-variable approach based on the interaction between a firm’s one-year lagged penalty amount and city-level thermal inversion days. The results show that environmental penalties reduce corporate supply chain resilience. This negative effect is heterogeneous across firm characteristics and is partially mediated by reduced operational efficiency and crowded-out R&D investment. This conclusion remains robust after replacing the dependent variable, changing the clustering level of standard errors, and excluding observations from the COVID-19 pandemic period. Mechanism tests suggest that environmental penalties weaken supply chain resilience partly by reducing operational efficiency and crowding out R&D investment. Heterogeneity analysis indicates that the negative effect is more pronounced among young firms, non-high-tech firms, and firms located in regions with lower environmental regulation intensity. This study contributes to the literature by distinguishing environmental penalties from broader environmental regulation and by examining their implications for supply chain resilience. The findings also suggest that environmental enforcement should maintain deterrence while improving transparency, predictability, and targeted compliance guidance.