Abstract
The semiconductor sector plays a crucial role in shaping national strategies and driving economic growth; however, it faces significant challenges prompting a shift towards sustainable development. This study aims to investigate whether sustainability initiatives of the focal firm can diffuse throughout the semiconductor supply chain, leveraging stakeholder salience theory and archival data from listed firms in China. Methodologically, we conduct a regression analysis using STATA 17.0 to examine the impact of the focal firm's sustainability disclosure on supply chain sustainability. Findings indicate a positive correlation between the focal company's sustainability disclosure and enhanced sustainability performance of its key suppliers and customers. This relationship is strengthened when the focal firm demonstrates significant market power, sustainability legitimacy, and urgency in addressing sustainability concerns. Our study contributes to the sustainable supply chain management literature by elucidating sustainability diffusion from a stakeholder salience perspective and offers practical insights for semiconductor managers and policymakers striving to foster sustainable practices within the sector.