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Promotion or hindrance? Digital transformation of the supply chain and total factor productivity of midstream enterprises

Author

Listed:
  • Yuqiong Zheng

    (Sichuan Agricultural University)

  • Yue Peng

    (Sichuan Agricultural University)

  • Wei Wang

    (Sichuan Agricultural University)

  • Yunqiang Liu

    (Sichuan Agricultural University)

  • Raymond Chiong

    (The University of New England
    The University of Newcastle)

Abstract

Digital transformation is essential for high-quality enterprise development, yet many firms face challenges due to limited resources and capabilities. This study analyzes supply chain data from A-share listed companies in China (2007–2022) using the fixed effects model, instrumental variable techniques, Heckman two-stage model, and mechanism test model to examine the spillover effects of upstream and downstream enterprises’ digital transformation on midstream enterprises’ total factor productivity and its underlying mechanisms. The results show that: (1) Digital transformation by upstream and downstream supply chain partners significantly enhances the total factor productivity of midstream enterprises—a finding that remains robust across multiple tests. (2) This effect operates through two main channels: technological progress and factor reallocation. The former is driven by enhanced digital adoption, increased research and development investment, and improved innovation quality, while the latter optimizes capital allocation and upgrades the labor structure. (3) The spillover effect is stronger when firms are geographically distant, operate in different industries, or when midstream enterprises exhibit higher supply chain dependency. This study offers theoretical insights and practical guidance for promoting high-quality development through supply chain-oriented digital transformation strategies.

Suggested Citation

  • Yuqiong Zheng & Yue Peng & Wei Wang & Yunqiang Liu & Raymond Chiong, 2025. "Promotion or hindrance? Digital transformation of the supply chain and total factor productivity of midstream enterprises," Palgrave Communications, Palgrave Macmillan, vol. 12(1), pages 1-18, December.
    • Handle: RePEc:pal:palcom:v:12:y:2025:i:1:d:10.1057_s41599-025-05426-2
    DOI: 10.1057/s41599-025-05426-2
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