Supply Chain Sustainability and Human Capital: A Multilevel Analysis

This study examines how corporate sustainability practices diffuse across global supply chains and how national contextual capacity shapes this process. Drawing on stakeholder and institutional perspectives, we conceptualize ESG transmission as relational and potentially asymmetric between customers and suppliers. Using a global panel of over 18,000 firm–pair observations (2014–2022) and a gravity‐based supply chain ESG indicator, we find that transmission is bidirectional but systematically asymmetric, with stronger influence flowing from customers to suppliers. National human capital, conceptualized as a stock measure of institutional capacity within the Inclusive Wealth framework, conditions this relationship in two ways. Higher human capital raises baseline ESG performance while weakening supplier‐to‐customer transmission. In contrast, cross‐country human capital gaps strengthen customer‐to‐supplier transmission, particularly in environmental domains. Environmental diffusion is more sensitive to contextual disparities than social diffusion. These findings clarify how relational position and institutional capacity jointly shape sustainability outcomes in global value chains.