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Strategic data capital investment in a supply chain

Author

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  • Baogui Xin

    (Shandong University of Science and Technology)

  • Yue Liu

    (Shandong University of Science and Technology)

  • Lei Xie

    (Shandong University)

Abstract

Digital transformation needs two essential phases of endeavors: digitalizing and data-driving business activities. The former involves much ICT capital investment that was widely studied, while the latter requires ongoing data capital investment (DCI) with many research gaps. Thus, firms face a trade-off dilemma in an input–output decision for DCI. To overcome the dilemma and fill such a gap, we first employ grounded theory to explore the underlying mechanisms of DCI to create value. Second, we construct a DCI-embedded game model and analyze DCI's economic effects under three supply chain power structures. Last, we conduct a case study to verify the main findings. The results suggest that: (i) supply chain firms can boost their profits through DCI only when the DCI implementation cost and level are within specific ranges; (ii) DCI has a positive vertical externality in the supply chain; and (iii) a firm will be more likely to implement DCI when it has a stronger market position in the supply chain.

Suggested Citation

  • Baogui Xin & Yue Liu & Lei Xie, 2023. "Strategic data capital investment in a supply chain," Operations Management Research, Springer, vol. 16(4), pages 1925-1948, December.
    • Handle: RePEc:spr:opmare:v:16:y:2023:i:4:d:10.1007_s12063-023-00402-y
    DOI: 10.1007/s12063-023-00402-y
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