Digital transformation, supply chain collaboration, and corporate innovation boundaries

Xuesong Li, Tingfa Zhou and Shanshan Cao

International Review of Economics & Finance, 2025, vol. 104, issue C

Abstract: Amid the rapid evolution of the digital economy and ongoing shifts in technological paradigms, how firms leverage digital transformation to effectively expand their innovation boundaries has become a key topic in strategic management and innovation research. Using panel data of listed firms in China from 2009 to 2022, this study systematically investigates the impact of digital transformation on firms' innovation boundaries and identifies the underlying transmission mechanism through the lens of supply chain collaboration. The empirical findings reveal three main insights. First, digital transformation significantly broadens firms' innovation boundaries by enhancing the cross-domain scope of their technological portfolios. This result remains robust across multiple model specifications and sensitivity checks. Second, supply chain concentration plays a critical mediating role, as digital transformation indirectly drives innovation boundary expansion by strengthening firms’ collaborative linkages with key customers and suppliers. Third, heterogeneity analyses show that this effect is more pronounced among small and medium-sized enterprises, technology-intensive firms, manufacturing firms, and those located in eastern China. This study contributes to the literature by expanding the analytical framework linking digital transformation and innovation, emphasizing the importance of supply chain structure as a key transmission channel. It also enriches the theoretical understanding of knowledge coordination and organizational boundary reconstruction in the digital era. The findings have important implications for promoting enterprise-level digital upgrading, enhancing collaborative innovation along industrial chains, and optimizing region-specific digital policy design.

Keywords: Digital transformation; Innovation boundary; Supply chain concentration; Empirical analysis (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:104:y:2025:i:c:s1059056025007919

DOI: 10.1016/j.iref.2025.104628

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