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AI innovation spillovers along the supply chain: Evidence from contractual relationship stability

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  • Tian, Haowen
  • Wang, Luyao
  • Su, Kun
  • Xie, Wenlan

Abstract

This study examines how a supplier's artificial intelligence (AI) innovation affects the stability of its contractual relationships with customers. Using data on Chinese A-share listed manufacturing firms from 2015 to 2023, we find that AI innovation, measured by invention patent filings, is positively associated with relationship continuance and sales growth. Results are robust to various fixed effects, alternative samples, and a staggered difference-in-differences (DID) design based on national AI pilot zones. Mechanism analyses show that AI improves operational efficiency and reduces agency costs, both of which contribute to more stable partnerships. The effect is stronger for key customers, smaller suppliers, competitive industries, and regions with more developed markets and higher provincial emphasis on AI. We also find a similar stabilizing effect when the customer, rather than the supplier, adopts AI innovation. Overall, the results provide evidence on how technological innovation reshapes vertical inter-firm partnerships and contributes to supply chain resilience.

Suggested Citation

  • Tian, Haowen & Wang, Luyao & Su, Kun & Xie, Wenlan, 2026. "AI innovation spillovers along the supply chain: Evidence from contractual relationship stability," Emerging Markets Review, Elsevier, vol. 73(C).
    • Handle: RePEc:eee:ememar:v:73:y:2026:i:c:s1566014126000592
    DOI: 10.1016/j.ememar.2026.101495
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