IDEAS home Printed from https://ideas.repec.org/a/eee/ecanpo/v87y2025icp2126-2145.html

Supply chain diffusion effect and digital transformation of small and medium-sized suppliers

Author

Listed:
  • Xie, Xueyan
  • Wang, Tianqing

Abstract

Both digital transformation and supply chain system construction are important measures to promote economic development. Although small and medium-sized enterprises (SMEs) face many difficulties in digital transformation, integrating into the supply chain system and establishing cooperative relationships with customers with technological innovation capabilities can provide new paths and possibilities for them. This paper uses the data of NEEQ listed companies and their customers from 2014 to 2023 to deeply investigate the impact of customer technological innovation on the digital transformation of small and medium-sized suppliers (SME suppliers). The research results show that customer technological innovation has a significant promoting effect on the digital transformation of SME suppliers, and this effect is more significant when they are private enterprises, located in the eastern and central regions, and in cities with developed transportation infrastructure. Mechanism tests show that customer technological innovation can generate knowledge spillovers, improve the labor structure, and relieve the financing constraints of SME suppliers, thereby promoting the digital transformation of them. The study on the moderating effect finds that a high degree of dependence on customers and economic uncertainty will weaken the above effects. These findings suggest key policy implications: SMEs should integrate into high-tech innovative supply chains, and governments should implement policies to mitigate SME shortages in technology, talent, and capital for digital transformation.

Suggested Citation

  • Xie, Xueyan & Wang, Tianqing, 2025. "Supply chain diffusion effect and digital transformation of small and medium-sized suppliers," Economic Analysis and Policy, Elsevier, vol. 87(C), pages 2126-2145.
    • Handle: RePEc:eee:ecanpo:v:87:y:2025:i:c:p:2126-2145
    DOI: 10.1016/j.eap.2025.08.005
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0313592625003273
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.eap.2025.08.005?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    References listed on IDEAS

    as
    1. Chen, Yufeng & Xu, Jing, 2023. "Digital transformation and firm cost stickiness: Evidence from China," Finance Research Letters, Elsevier, vol. 52(C).
    2. Daron Acemoglu & Pascual Restrepo, 2018. "The Race between Man and Machine: Implications of Technology for Growth, Factor Shares, and Employment," American Economic Review, American Economic Association, vol. 108(6), pages 1488-1542, June.
    3. Mingtao Yu & Aiguo Yan, 2022. "Can Digital Finance Accelerate the Digital Transformation of Companies? From the Perspective of M&A," Sustainability, MDPI, vol. 14(21), pages 1-16, November.
    4. Tian, Guangning & Li, Bo & Cheng, Yue, 2022. "Does digital transformation matter for corporate risk-taking?," Finance Research Letters, Elsevier, vol. 49(C).
    5. Yongqiang Chu & Xuan Tian & Wenyu Wang, 2019. "Corporate Innovation Along the Supply Chain," Management Science, INFORMS, vol. 67(6), pages 2445-2466, June.
    6. Xin, Fu & Zhang, Jie & Zheng, Wenping, 2017. "Does credit market impede innovation? Based on the banking structure analysis," International Review of Economics & Finance, Elsevier, vol. 52(C), pages 268-288.
    7. Zhang, Cheng & Zhou, Bo & Tian, Xuan, 2022. "Political connections and green innovation: The role of a corporate entrepreneurship strategy in state-owned enterprises," Journal of Business Research, Elsevier, vol. 146(C), pages 375-384.
    8. Niu, Yuhao & Wen, Wen & Wang, Sai & Li, Sifei, 2023. "Breaking barriers to innovation: The power of digital transformation," Finance Research Letters, Elsevier, vol. 51(C).
    9. Cui, Lin & Wang, Yanshu, 2023. "Can corporate digital transformation alleviate financial distress?," Finance Research Letters, Elsevier, vol. 55(PB).
    10. Yi Che & Lei Zhang, 2018. "Human Capital, Technology Adoption and Firm Performance: Impacts of China's Higher Education Expansion in the Late 1990s," Economic Journal, Royal Economic Society, vol. 128(614), pages 2282-2320, September.
    11. Zhou, Zhongsheng & Li, Zhuo, 2023. "Corporate digital transformation and trade credit financing," Journal of Business Research, Elsevier, vol. 160(C).
    12. Rui Li & Jing Rao & Liangyong Wan, 2022. "The digital economy, enterprise digital transformation, and enterprise innovation," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(7), pages 2875-2886, October.
    13. Itzkowitz, Jennifer, 2013. "Customers and cash: How relationships affect suppliers' cash holdings," Journal of Corporate Finance, Elsevier, vol. 19(C), pages 159-180.
    14. Andrew B. Bernard & Andreas Moxnes & Yukiko U. Saito, 2019. "Production Networks, Geography, and Firm Performance," Journal of Political Economy, University of Chicago Press, vol. 127(2), pages 639-688.
    15. Wu, Chia-Hung & Chou, Che-Wei & Chien, Chen-Fu & Lin, Yun-Siang, 2024. "Digital transformation in manufacturing industries: Effects of firm size, product innovation, and production type," Technological Forecasting and Social Change, Elsevier, vol. 207(C).
    16. Zhu, Xiumei & Li, Yue, 2023. "The use of data-driven insight in ambidextrous digital transformation: How do resource orchestration, organizational strategic decision-making, and organizational agility matter?," Technological Forecasting and Social Change, Elsevier, vol. 196(C).
    17. Francesco Caselli & Wilbur John Coleman II, 2006. "The World Technology Frontier," American Economic Review, American Economic Association, vol. 96(3), pages 499-522, June.
    18. Scott R. Baker & Nicholas Bloom & Steven J. Davis, 2016. "Measuring Economic Policy Uncertainty," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 131(4), pages 1593-1636.
    19. Isaksson, Olov H.D. & Simeth, Markus & Seifert, Ralf W., 2016. "Knowledge spillovers in the supply chain: Evidence from the high tech sectors," Research Policy, Elsevier, vol. 45(3), pages 699-706.
    20. Tang, Jinghua & Wang, Xiaoming & Liu, Qigui, 2023. "The spillover effect of customers' ESG to suppliers," Pacific-Basin Finance Journal, Elsevier, vol. 78(C).
    21. Cen, Ling & Maydew, Edward L. & Zhang, Liandong & Zuo, Luo, 2017. "Customer–supplier relationships and corporate tax avoidance," Journal of Financial Economics, Elsevier, vol. 123(2), pages 377-394.
    22. Li, Keming, 2018. "Innovation externalities and the customer/supplier link," Journal of Banking & Finance, Elsevier, vol. 86(C), pages 101-112.
    23. Steven N. Kaplan & Luigi Zingales, 1997. "Do Investment-Cash Flow Sensitivities Provide Useful Measures of Financing Constraints?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(1), pages 169-215.
    24. Si Luo & Miaochao Chen, 2022. "Digital Finance Development and the Digital Transformation of Enterprises: Based on the Perspective of Financing Constraint and Innovation Drive," Journal of Mathematics, Hindawi, vol. 2022, pages 1-10, March.
    25. Hyuk Chung & Kyunam Kim, 2023. "Can open innovation improve technological outcomes for digital transformation?: Structural approach to strategic decisions of Korean ICT SMEs," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(8), pages 4404-4421, December.
    26. Li, Mengzhe & Guo, Siyuan & Wang, Xizi & Liu, Yingqi, 2024. "Increase or decrease: Customer digital transformation and supplier cost stickiness," Pacific-Basin Finance Journal, Elsevier, vol. 87(C).
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Qi, Qiuyue & Lu, Ping & Zhao, Xiangru, 2025. "Corporate carbon regulation, green innovation and supply chain spillover," Innovation and Green Development, Elsevier, vol. 4(5).
    2. Guo, Chenhao & Ke, Yun & Zhang, Jinkang, 2023. "Digital transformation along the supply chain," Pacific-Basin Finance Journal, Elsevier, vol. 80(C).
    3. Li, Mengzhe & Guo, Siyuan & Wang, Xizi & Liu, Yingqi, 2024. "Increase or decrease: Customer digital transformation and supplier cost stickiness," Pacific-Basin Finance Journal, Elsevier, vol. 87(C).
    4. Wang, Weilong & Xiao, Deheng & Wang, Jianlong & Wu, Haitao, 2024. "The cost of pollution in the digital era: Impediments of air pollution on enterprise digital transformation," Energy Economics, Elsevier, vol. 134(C).
    5. Ma, Defang & Wang, Jindong & Zeng, Bo & Liu, Ying & Xie, Yuze, 2025. "Does digital transformation enhance financial flexibility?," International Review of Financial Analysis, Elsevier, vol. 106(C).
    6. Geng, Yong & Xiang, Xiaojian & Zhang, Guosheng & Li, Xue, 2024. "Digital transformation along the supply chain: Spillover effects from vertical partnerships," Journal of Business Research, Elsevier, vol. 183(C).
    7. Zhou, Zhongsheng & Yuan, Zhichao & He, Chao, 2025. "Can digital transformation promote firms' sustainable development? Evidence based on ESG performance," International Review of Financial Analysis, Elsevier, vol. 105(C).
    8. Yan Liu & Qiuju He, 2024. "Digital transformation, external financing, and enterprise resource allocation efficiency," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 45(4), pages 2321-2335, June.
    9. Nie, Jun & Jian, Xin & Xu, Juanjuan & Xu, Nuo & Jiang, Tangyang & Yu, Yang, 2024. "The effect of corporate social responsibility practices on digital transformation in China: A resource-based view," Economic Analysis and Policy, Elsevier, vol. 82(C), pages 1-15.
    10. Tian, Meng & Wang, Yiwei & Han, Lei & Yang, Zhuowen, 2025. "Impact mechanism and contribution measurement of digital transformation on scale expansion of Chinese enterprises," Socio-Economic Planning Sciences, Elsevier, vol. 102(C).
    11. Xu, Yanhui & Deng, Fuhua & Feng, Qianbin, 2025. "The effect of tax enforcement digitalization on corporate digital transformation: Evidence from China's listed companies," Economic Analysis and Policy, Elsevier, vol. 85(C), pages 1105-1134.
    12. Qian, Yuan, 2025. "Supply chain spillover effects of corporate voluntary green behavior: A quasi-natural experiment from China," International Review of Economics & Finance, Elsevier, vol. 103(C).
    13. Wang, Jiaxin & Zhao, Mu & Huang, Xiang & Song, Zilong & Sun, Di, 2024. "Supply chain diffusion mechanisms for AI applications: A perspective on audit pricing," International Review of Financial Analysis, Elsevier, vol. 93(C).
    14. Dasgupta, Sudipto & Chen, Chen & Huynh, Thanh & Xia, Ying, 2020. "Product Market Competition and the Relocation of Economic Activity: Evidence from the Supply Chain," CEPR Discussion Papers 15056, C.E.P.R. Discussion Papers.
    15. Liu, Guanchun & Liu, Yuanyuan & Zhang, Chengsi, 2021. "Human capital in the financial sector and corporate debt maturity," China Economic Review, Elsevier, vol. 69(C).
    16. Manh Cuong Nguyen & Viet Anh Dang & Tri Tri Nguyen, 2023. "The transfer of risk taking along the supply chain," Review of Quantitative Finance and Accounting, Springer, vol. 61(4), pages 1341-1378, November.
    17. Li, Na & Zhang, Xianhua, 2025. "Digital empowered business environment and enterprise innovation: Evidence from China," Pacific-Basin Finance Journal, Elsevier, vol. 91(C).
    18. Zheng, Deyuan & Song, Hang & Zhao, Chunguang & Liu, Yujiao & Zhao, Wenhao, 2024. "Is it possible for semiconductor companies to reduce carbon emissions through digital transformation? Evidence from China," International Journal of Production Economics, Elsevier, vol. 272(C).
    19. Guo, Panting & Bi, Jiefeng & Zhu, Mengnan, 2025. "Enterprise digital transformation and investment efficiency: Empirical evidence from listed enterprises in China," Journal of Asian Economics, Elsevier, vol. 97(C).
    20. Li, Longda, 2024. "The environmental spillovers of buyers' digital transformation: Evidence from China," Technological Forecasting and Social Change, Elsevier, vol. 209(C).

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ecanpo:v:87:y:2025:i:c:p:2126-2145. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.journals.elsevier.com/economic-analysis-and-policy .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.