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Digital transformation and supply chain risk: Evidence from Chinese manufacturing firms

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  • Li, Xin
  • Yang, Zheng
  • Yu, Dianfan

Abstract

As trade protectionism rises and international conflicts intensify, the risk of supply chain disruption has increased significantly. There is great practical value in quantifying supply chain risk and developing effective strategies to manage it. This study uses the Baidu's ERNIE 4.5 large language model to construct a firm-level supply chain risk index based on listed companies' annual reports. It then systematically evaluates the impact of digital transformation on supply chain risk. The findings reveal that digital transformation effectively reduces supply chain risk by enabling firms to search for high-quality partners and optimize supply-demand matching. Heterogeneity analysis indicates that the risk-mitigating effect of digital transformation is stronger in cities with more advanced digital infrastructure, industries facing higher competitive pressure, and firms with higher network centrality or greater export dependence. This study provides empirical evidence and practical guidance for accelerating digital transformation and building a secure supply chain system.

Suggested Citation

  • Li, Xin & Yang, Zheng & Yu, Dianfan, 2026. "Digital transformation and supply chain risk: Evidence from Chinese manufacturing firms," Economic Modelling, Elsevier, vol. 159(C).
    • Handle: RePEc:eee:ecmode:v:159:y:2026:i:c:s0264999326001069
    DOI: 10.1016/j.econmod.2026.107577
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    1. Guo, Libin & Liu, Kang & Ren, Yi, 2026. "Can digital transformation promote technological diversification?," International Review of Economics & Finance, Elsevier, vol. 109(C).

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    Keywords

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    JEL classification:

    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

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