Innovation Disclosure and Supply Chain Risk: Networks, Collaboration, and Spillovers

Supply chain risk management has become a core element of corporate strategy, yet systematic evidence on how innovation information disclosure affects supply chain risk remains scarce. We study how innovation information disclosure in firms’ MD&A sections affects supply chain risk. Using data on Chinese A-share listed firms from 2012 to 2023, we find that firms disclosing more innovation-related content face significantly a lower supply chain risk. This result remains true following instrumental variable estimation, propensity score matching, entropy balancing, and controlling for province- and industry-specific time trends. We provide supportive evidence for three circumstances: firms that disclose more have a broader and more diverse set of supply chain partners; they engage in more joint patenting with partners, consistent with higher switching costs and more stable relationships; and they exhibit stronger reputations and commercial credit capacity, consistent with partnerships reinforced through both trust and financial ties. The effect is concentrated among non-SOEs, high-tech firms, firms in competitive industries, and firms outside the digital economy, all settings in which information asymmetry is more severe and alternative channels for conveying innovation capabilities are limited. We also document asymmetric vertical spillovers: downstream customers’ innovation disclosure prompts upstream suppliers to become more transparent, but the reverse does not hold. Supply chain risk, by contrast, affects connected firms in both directions. These findings extend the literature on the economic consequences of innovation disclosure from capital markets to supply chain management.