Dual-Pilot Policies and Corporate Supply Chain Resilience: Evidence from Commercial Logistics Node Cities and Supply Chain Innovation Pilot Cities
This study utilizes a double machine learning approach on Chinese listed firms to demonstrate that the coordinated implementation of commercial logistics node and supply chain innovation pilot policies significantly enhances corporate supply chain resilience through mechanisms such as digitalization, risk reduction, and improved innovation efficiency.
Original paper licensed under CC BY 4.0 (https://creativecommons.org/licenses/by/4.0/). This is an AI-generated explanation of the paper below. It is not written or endorsed by the authors. For technical accuracy, refer to the original paper. Read full disclaimer
In the modern world, the things we buy and the materials we need to make them travel through vast, intricate networks known as supply chains. These networks are the invisible arteries of the global economy, moving goods from factories to stores and from farms to kitchens. For a business to survive, these arteries must remain open and flowing, even when the world around them shakes. This ability to withstand a shock, keep operating, and bounce back quickly is called resilience. In recent years, the stability of these networks has been tested by everything from trade disputes to global pandemics, leaving companies vulnerable to sudden stops in production, delays in delivery, and rising costs. While many experts have looked at how a single company can protect itself, there has been less understanding of how government policies, working together, can strengthen the entire system.
A team of researchers from the Guilin University of Technology set out to examine a specific moment in China where two different government strategies were applied at the same time. One strategy focused on building better physical logistics hubs, essentially creating stronger road and rail connections and distribution centers in key cities. The other strategy focused on digital innovation, encouraging companies to use technology to share information and coordinate better with their suppliers and customers. The researchers wanted to know if these two approaches, when combined, created a safety net that was stronger than the sum of its parts. By analyzing data from thousands of companies over more than a decade, they discovered that when a city received both types of support, the businesses located there became significantly more resilient. They found that these companies were better at spotting risks early, managing their inventory, and recovering when things went wrong.
To reach this conclusion, the team looked at a massive dataset covering 32,208 records of companies listed on the Shanghai and Shenzhen stock exchanges between 2012 and 2024. They focused on a specific group of cities that were chosen to receive both the logistics infrastructure upgrades and the supply chain innovation pilots. By comparing these companies to similar ones in cities that did not receive this dual support, the researchers could isolate the effect of the policies. They used advanced computer methods to account for other factors that might influence a company's success, such as its size, debt, or industry type, ensuring that the results were driven by the policies themselves. The analysis showed a clear pattern: companies in the dual-pilot cities had a much higher capacity to absorb shocks and maintain their operations compared to their peers elsewhere.
The study also peeled back the layers to understand exactly how this improvement happened. It turned out that the dual policies worked by tackling problems on two fronts. First, the physical logistics upgrades reduced the friction of moving goods. By improving the roads, warehouses, and distribution networks, the policies made it easier for companies to find alternative routes or suppliers when a specific path was blocked. Second, the digital innovation policies helped companies see what was happening inside their networks. By encouraging the use of digital platforms to share data, companies could spot a delay in a shipment or a spike in demand much faster than before. This combination of better physical roads and better digital eyes allowed companies to react quickly. The researchers found that these companies became more digital, faced fewer risks, shared information more transparently with their partners, and used their resources for innovation more efficiently.
Not every company benefited from the policies in the same way. The researchers found that the boost in resilience was most pronounced for companies that were not heavily polluting, those located in regions with more developed market systems, and those in technology-intensive industries. Companies in heavily polluting industries often face strict regulations that make it harder to change their operations quickly, which may have limited their ability to take full advantage of the new policies. Similarly, companies in regions where markets are already efficient could integrate the new tools and infrastructure more smoothly. Technology-focused firms, which are already accustomed to using data and adapting their processes, were able to leverage the new digital and physical tools to build stronger defenses against disruption.
The findings suggest that building a resilient supply chain is not just about a single company buying more insurance or stockpiling extra goods. It is about the environment in which the company operates. When governments invest in the physical infrastructure that moves goods and simultaneously support the digital tools that manage them, they create a foundation that allows businesses to be more agile. The study indicates that this coordinated approach helps companies identify risks before they become crises, respond to disruptions while they are happening, and recover faster afterward. For policymakers, the message is clear: supporting the physical network and the digital network together creates a powerful synergy that protects the economy from the uncertainties of the future. For businesses, it highlights the value of operating in regions where these systems are integrated, as that environment provides a natural shield against the inevitable shocks of the global market.
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