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How supply chain digitalization investment affects firm's financial and non-financial performance: Evidence from listed companies in China

Author

Listed:
  • Wu, Yongqiu
  • Wang, Jie
  • Yang, Pianpian

Abstract

Although many studies have focused on the impact of digitalization on firm performance, a definitive conclusion has yet to be reached. This study aims to comprehensively reveal the mechanisms by which SCDI affects firm performance. We employ large language model to identify the annual report information, and measure the SCDI for Chinese listed companies from 2017 to 2022. The empirical results indicate that SCDI contributes to improving supply chain capabilities, including reducing supply chain risk and enhancing supply chain efficiency. However, it also leads to increased financial risk and resource slack. Furthermore, SCDI decreases financial performance but increases non-financial performance. This study is an early attempt to uncover the paradoxical outcomes of SCDI, providing a new explanation of digitalization failure and the mechanisms behind the “IT-productivity paradox” hypothesis.

Suggested Citation

  • Wu, Yongqiu & Wang, Jie & Yang, Pianpian, 2024. "How supply chain digitalization investment affects firm's financial and non-financial performance: Evidence from listed companies in China," International Review of Financial Analysis, Elsevier, vol. 96(PA).
    • Handle: RePEc:eee:finana:v:96:y:2024:i:pa:s1057521924005714
    DOI: 10.1016/j.irfa.2024.103639
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    More about this item

    Keywords

    Supply chain digitalization; Supply chain capability; Resource slack; Firm performance;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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