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Unlocking the potential of inventory management: Integrating digital transformation with firm practices

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  • Fang, Yuan
  • Zhou, Qian
  • Jiang, Xiandeng
  • Li, Chao

Abstract

Digitalization has brought a substantial economic impact on firms' production and operation. This study utilizes firm-level data from the China National Tax Statistics Database to investigate the impact of the Broadband China Strategy on firms’ inventory levels, which are an important strategic resource for firms. We find that Internet access and development result in a sharp decrease in inventory levels, particularly in small and medium-sized enterprises. Furthermore, digital infrastructure can mitigate the negative effects of an insufficient supply of transportation infrastructure. This paper also shows that the enhancements in inventory management are attributable to the increased adoption and improved affordability of broadband Internet among firms. We discuss the role of inventory, providing a thorough understanding of the logic behind the enhanced productivity improvements brought about by digitalization.

Suggested Citation

  • Fang, Yuan & Zhou, Qian & Jiang, Xiandeng & Li, Chao, 2024. "Unlocking the potential of inventory management: Integrating digital transformation with firm practices," Economic Modelling, Elsevier, vol. 139(C).
    • Handle: RePEc:eee:ecmode:v:139:y:2024:i:c:s0264999324001986
    DOI: 10.1016/j.econmod.2024.106841
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    More about this item

    Keywords

    Digital economy; Inventory; Broadband China strategy; Internet access;
    All these keywords.

    JEL classification:

    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications

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