Social credit system implementation and supply chain decision-making: Disclosure and real effect

This study exploits the pilot implementation of China's Social Credit System (SCS) as a quasi-natural experiment to examine how institutional reinforcement shapes firms' supply chain disclosure practices and structural decisions. The results show that the development of the SCS significantly reduces supply chain transparency, while simultaneously encouraging firms to adopt more decentralized supply chain structures, reflecting strategic responses to heightened reputational risk and external scrutiny. Mechanism analyses indicate that the SCS increases firms' information exposure, which in turn affects both their disclosure behavior and operational choices. These effects are particularly pronounced when media attention is high, litigation risk is elevated, or internal governance conflicts are present. Overall, the findings demonstrate that firms coordinate disclosure and structural adjustments in response to institutional pressures, balancing compliance with risk mitigation. By highlighting the dual and interactive influence of institutional transparency and reputational mechanisms, this study provides new insights into how evolving institutional environments shape firm-level strategic behavior and supply chain management practices.