IDEAS home Printed from https://ideas.repec.org/a/eee/finlet/v64y2024ics1544612324004434.html
   My bibliography  Save this article

The impact of digital technology adoption on corporate supply chain concentration: Evidence from patent analysis

Author

Listed:
  • Zhou, Huiyang
  • Wang, Ruzhou
  • Zhang, Xiyu
  • Chang, Minyen

Abstract

This study examines the association between digital technology adoption and supply chain concentration. Using the detailed patent description data of publicly listed Chinese companies over 2007–2021, we identify the level of digital technology adoption in those companies by machine learning. We find supply chain concentration is significantly lower when the level of digital technology adoption is higher. Results from further analysis suggest the relation between digital technology adoption and supply chain concentration is more prominent when the company, compared to rivals, gains competitive advantage. Meanwhile, the age of the CEO and the industry the firm belongs to influence the relation. Additionally, the adoption of digital technologies significantly improves the performance of listed companies. Overall, this study suggests the incorporation of digital technologies shapes the inter-firm relationship and enriches the understanding of supply chain relationships, which have a profound implication on supply chain management.

Suggested Citation

  • Zhou, Huiyang & Wang, Ruzhou & Zhang, Xiyu & Chang, Minyen, 2024. "The impact of digital technology adoption on corporate supply chain concentration: Evidence from patent analysis," Finance Research Letters, Elsevier, vol. 64(C).
    • Handle: RePEc:eee:finlet:v:64:y:2024:i:c:s1544612324004434
    DOI: 10.1016/j.frl.2024.105413
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1544612324004434
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.frl.2024.105413?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Joel Peress, 2010. "Product Market Competition, Insider Trading, and Stock Market Efficiency," Journal of Finance, American Finance Association, vol. 65(1), pages 1-43, February.
    2. Sara Saberi & Mahtab Kouhizadeh & Joseph Sarkis & Lejia Shen, 2019. "Blockchain technology and its relationships to sustainable supply chain management," International Journal of Production Research, Taylor & Francis Journals, vol. 57(7), pages 2117-2135, April.
    3. Chen, Yongmin, 2020. "Improving market performance in the digital economy," China Economic Review, Elsevier, vol. 62(C).
    4. Wagner, Stephan M., 2006. "A firm's responses to deficient suppliers and competitive advantage," Journal of Business Research, Elsevier, vol. 59(6), pages 686-695, June.
    5. Toorajipour, Reza & Sohrabpour, Vahid & Nazarpour, Ali & Oghazi, Pejvak & Fischl, Maria, 2021. "Artificial intelligence in supply chain management: A systematic literature review," Journal of Business Research, Elsevier, vol. 122(C), pages 502-517.
    6. He, Wei & Zhang, Yujiao & Wang, Mingshan, 2024. "Fintech, supply chain concentration and enterprise digitization: Evidence from chinese manufacturing listed companies," Finance Research Letters, Elsevier, vol. 59(C).
    7. Costello, Anna M., 2013. "Mitigating incentive conflicts in inter-firm relationships: Evidence from long-term supply contracts," Journal of Accounting and Economics, Elsevier, vol. 56(1), pages 19-39.
    8. Campello, Murillo & Gao, Janet, 2017. "Customer concentration and loan contract terms," Journal of Financial Economics, Elsevier, vol. 123(1), pages 108-136.
    9. B. Korcan Ak & Panos N. Patatoukas, 2016. "Customer-Base Concentration and Inventory Efficiencies: Evidence from the Manufacturing Sector," Production and Operations Management, Production and Operations Management Society, vol. 25(2), pages 258-272, February.
    10. Michael E. Porter, 1991. "Towards a dynamic theory of strategy," Strategic Management Journal, Wiley Blackwell, vol. 12(S2), pages 95-117, December.
    11. Dhaliwal, Dan & Judd, J. Scott & Serfling, Matthew & Shaikh, Sarah, 2016. "Customer concentration risk and the cost of equity capital," Journal of Accounting and Economics, Elsevier, vol. 61(1), pages 23-48.
    12. Liang, Zhentang & Zhao, Yunying, 2024. "Enterprise digital transformation and stock price crash risk," Finance Research Letters, Elsevier, vol. 59(C).
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Agnes C. S. Cheng & Wenli Huang & Shaojun Zhang, 2020. "Major government customer and management earnings forecasts," Frontiers of Business Research in China, Springer, vol. 14(1), pages 1-20, December.
    2. Cao, Yue & Dong, Yizhe & Ma, Diandian & Sun, Li, 2021. "Customer concentration and corporate risk-taking," Journal of Financial Stability, Elsevier, vol. 54(C).
    3. Do, Trung K. & Huang, Henry Hongren & Le, Anh-Tuan, 2023. "Customer concentration and stock liquidity," Journal of Banking & Finance, Elsevier, vol. 154(C).
    4. David, Thomas & Troege, Michael & Nguyen, Hiep Manh & Nguyen, Hang Thu, 2024. "Relationship-specific investments for up- and downstream firms and credit constraints," Journal of Corporate Finance, Elsevier, vol. 84(C).
    5. Dong, Yizhe & Li, Chang & Li, Haoyu, 2021. "Customer concentration and M&A performance," Journal of Corporate Finance, Elsevier, vol. 69(C).
    6. Di Gao & Yuan Zhao & Jiangming Ma, 2023. "How Does Supply Chain Information Disclosure Relate to Corporate Investment Efficiency? Evidence from Chinese-Listed Companies," Sustainability, MDPI, vol. 15(8), pages 1-22, April.
    7. Mei Cheng & Jacob Jaggi & Spencer Young, 2022. "Customer concentration of targets in mergers and acquisitions," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 49(7-8), pages 1314-1355, July.
    8. Jiangming Ma & Di Gao, 2023. "The Impact of Sustainable Supply-Chain Partnership on Bank Loans: Evidence from Chinese-Listed Firms," Sustainability, MDPI, vol. 15(6), pages 1-25, March.
    9. Wang, Jiaxin & Zhao, Mu & Huang, Xiang & Song, Zilong & Sun, Di, 2024. "Supply chain diffusion mechanisms for AI applications: A perspective on audit pricing," International Review of Financial Analysis, Elsevier, vol. 93(C).
    10. Wen, Wen & Ke, Yun & Liu, Xuejiao, 2021. "Customer concentration and corporate social responsibility performance: Evidence from China," Emerging Markets Review, Elsevier, vol. 46(C).
    11. Jandik, Tomas & Salikhova, Tatiana, 2023. "The effect of social connections on capital structure in supplier-customer relationships," Journal of Corporate Finance, Elsevier, vol. 79(C).
    12. Casalin, Fabrizio & Pang, Gu & Maioli, Sara & Cao, Ting, 2017. "Inventories and the concentration of suppliers and customers: Evidence from the Chinese manufacturing sector," International Journal of Production Economics, Elsevier, vol. 193(C), pages 148-159.
    13. Rahaman, Mohammad M. & Rau, P. Raghavendra & Zaman, Ashraf Al, 2020. "The effect of supply chain power on bank financing," Journal of Banking & Finance, Elsevier, vol. 114(C).
    14. Chen Chen & Ting‐Chiao Huang & Mukesh Garg & Mehdi Khedmati, 2021. "Governments as customers: Exploring the effects of government customers on supplier firms’ information quality," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 48(9-10), pages 1630-1667, October.
    15. Dan Dhaliwal & Paul N. Michas & Vic Naiker & Divesh Sharma, 2020. "Greater Reliance on Major Customers and Auditor Going‐Concern Opinions," Contemporary Accounting Research, John Wiley & Sons, vol. 37(1), pages 160-188, March.
    16. Pan, Jianping & Yu, Manjiao & Liu, Jiayuan & Fan, Rui, 2020. "Customer concentration and corporate innovation: Evidence from China," The North American Journal of Economics and Finance, Elsevier, vol. 54(C).
    17. Jyun‐Ying Fu, 2023. "Customer concentration and corporate charitable donations: Evidence from China," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(1), pages 545-561, January.
    18. Zhang, Jiping & Mo, Haimiao & Hu, Zhijian & Zhang, Tianjiao, 2024. "The effect of stability and concentration of upstream and downstream relationships of focal firms on two-level trade credit," International Journal of Production Economics, Elsevier, vol. 270(C).
    19. Huang, Wan & Bai, Yufan & Luo, Hong, 2024. "Customer identity concealing and insider selling profitability: Evidence from China," Journal of Corporate Finance, Elsevier, vol. 85(C).
    20. Wang, Lu & Su, Zhong-qin & Fung, Hung-Gay & Jin, Hong-min & Xiao, Zuoping, 2021. "Do CEOs with academic experience add value to firms? Evidence on bank loans from Chinese firms," Pacific-Basin Finance Journal, Elsevier, vol. 67(C).

    More about this item

    Keywords

    Digital technology adoption; Supply chain concentration; Patent data;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:finlet:v:64:y:2024:i:c:s1544612324004434. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/frl .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.