Technical Summary: "Centripetal Force" or "Centrifugal Force"? Research on the Asymmetric Impact of Digital Technology Innovation on the Resilience of Enterprise Supply Chains

1. Problem Statement and Research Context

Global supply chains face increasing risks of disintegration and restructuring due to volatile external environments, geopolitical decoupling, and "small yard, high fence" policies. While digital technology innovation is widely recognized as a driver for efficiency and transparency, its impact on supply chain resilience remains contested. Existing literature often aggregates supplier and customer relationships into a single construct, overlooking potential asymmetric effects.

The core problem addressed is whether digital technology innovation acts as a "centripetal force" (deepening lock-in and concentration) or a "centrifugal force" (promoting diversification and flexibility) within enterprise supply chains. Specifically, the study investigates how digital innovation differentially affects supplier relationship resilience (upstream) versus customer relationship resilience (downstream) and seeks to uncover the underlying transmission mechanisms, such as switching costs and synergy efficiency traps.

2. Methodology and Data

2.1 Data Sources and Sample

• Sample: Chinese A-share listed firms from 2010 to 2022.
• Final Observations: 12,638 firm-year observations after excluding financial firms, ST/*ST firms, and observations with missing data.
• Data Providers: CSMAR (supply chain data), WinGo Financial Text Data Platform (patent data), and iFinD/Wind (control variables).

2.2 Variable Construction

• Independent Variable (Digital Technology Innovation): Unlike traditional "word-frequency" methods in annual reports, this study constructs a novel measure based on invention patents. It matches firm patent data with the Classification Reference Table for Core Digital Economy Industries and International Patent Classification (2023) issued by the China National Intellectual Property Administration (CNIPA). Only patents with main IPC codes falling under digital economy categories are counted, and the variable is log-transformed (ln(patents + 1)).
• Dependent Variables (Supply Chain Resilience): The study decomposes resilience into two dimensions based on diversification (the inverse of concentration):
  • Supplier Relationship Resilience (Supply): Measured by the proportion of purchases from the top five suppliers relative to total purchases.
  • Customer Relationship Resilience (Customer): Measured by the proportion of sales to the top five customers relative to total sales.
  • Note: Lower concentration (higher diversification) indicates higher resilience.
• Control Variables: Firm size, leverage, profitability (ROA), financing constraints (WW index), cash flow, growth, inventory turnover, Tobin's Q, capital intensity, ownership concentration, and board independence.

2.3 Econometric Models

• Baseline: Two-way fixed-effects models (firm and year) with heteroskedasticity-robust standard errors.
• Endogeneity Mitigation:
  • Instrumental Variables (IV): Two-stage least squares (2SLS) using (1) the interaction of 1984 post offices per capita and lagged national internet users, and (2) the industry average of digital innovation (excluding the firm).
  • Propensity Score Matching (PSM): Matching firms with high vs. low digital innovation based on industry medians.
  • Lagged Variables: Using one- and two-period lags of the independent variable.
• Mechanism Testing: Three-step mediation analysis (Baron & Kenny approach) to test:
  • Supplier Switching Costs: Proxied by the ratio of accounts payable to total liabilities.
  • Synergy Efficiency Trap: Proxied by the deviation between production volatility and demand volatility.

3. Key Contributions

The paper claims three primary marginal contributions:

1. Novel Measurement: It introduces a more rigorous measure of digital technology innovation by linking invention patents to the official CNIPA digital economy classification, avoiding the "saying without doing" and identification limitations of word-frequency approaches.
2. Asymmetric Analysis: It challenges the assumption that suppliers and customers share identical transaction dynamics. The study separately examines the impacts of digital innovation on upstream (supplier) and downstream (customer) relationships, revealing divergent outcomes.
3. Mechanism Elucidation: It identifies specific transmission channels: digital innovation reduces supplier switching costs (enhancing resilience) but creates a "synergy efficiency trap" with customers (reducing resilience).

4. Empirical Results

4.1 Baseline Findings

Digital technology innovation exhibits a significant asymmetric impact:

• Supplier Side: It significantly improves supplier relationship resilience (coefficient negative and significant, indicating reduced concentration). Digital innovation lowers search and switching costs, enabling firms to diversify their supplier base.
• Customer Side: It significantly reduces customer relationship resilience (coefficient positive and significant, indicating increased concentration). Digital innovation deepens integration with major customers, leading to higher sales concentration.

4.2 Mechanism Verification

• Supplier Switching Costs: Digital innovation increases the accounts payable ratio (indicating lower switching costs and higher bargaining power), which in turn increases supplier diversification.
• Synergy Efficiency Trap: Digital innovation reduces the deviation between production and demand volatility (improving synergy). However, this deep integration leads to resource lock-in with specific customers, creating an "efficiency trap" that increases vulnerability to shocks and reduces the ability to switch customers.

4.3 Heterogeneity Analysis

• Ownership: The positive effect on supplier resilience is significant for non-SOEs (private firms) but insignificant for SOEs. Conversely, the negative effect on customer resilience (increased concentration) is significant for SOEs but negligible for non-SOEs. SOEs' dominant market position naturally attracts concentration, while private firms actively pursue diversification.
• Trade Credit: The negative impact on customer resilience is significant only for firms providing low levels of trade credit. For firms providing high trade credit, the relationship is already locked in, rendering digital innovation's effect on concentration insignificant.
• Labor Structure: The asymmetric effects are pronounced in firms with high-skill labor structures (R&D/tech-intensive). In low-skill manufacturing firms, the impact is less significant, suggesting a lag in the realization of digital benefits.

4.4 Robustness

Results remain robust across alternative dependent variable measurements (Herfindahl index), sample adjustments (excluding 2022 data due to patent lag), and various fixed-effect specifications.

5. Significance and Implications

The paper concludes that digital technology innovation is a double-edged sword for supply chain resilience. While it acts as a centrifugal force for suppliers by lowering switching costs and enabling diversification, it acts as a centripetal force for customers by fostering deep, efficiency-driven lock-in.

Practical Implications:

• For Firms: Managers should leverage digital tools to diversify supplier bases to mitigate supply-side risks. However, they must be cautious of over-reliance on major customers driven by digital synergy, as this creates a "synergy efficiency trap." Firms should actively pursue customer diversification strategies.
• For Policy Makers:
  • Governments should support digital transformation, particularly for SMEs that cannot bear the costs alone, through fiscal and technical support.
  • Policy should encourage "point-to-area" supply chain layouts where leading firms (especially SOEs) foster alliances with private firms to balance concentration and diversification.
  • Efforts should be made to promote customer diversification and reduce dependence on single large buyers to enhance overall supply chain security.

The study emphasizes that enhancing supply chain resilience requires a nuanced understanding of digital innovation's dual role: it strengthens the upstream network's flexibility while potentially weakening the downstream network's adaptability.