Digital transformation and corporate innovation boundaries: Role of supply chain concentration and transparency

Pengcheng Li, Xiaochuan Guo, Fengzheng Wang and Qifeng Zhang

International Review of Financial Analysis, 2025, vol. 98, issue C

Abstract: Digital transformation reshapes business operations, yet its impact on corporate innovation boundaries remains unclear. Although research has explored the impact of digital transformation on firm performance, understanding how it interacts with supply chain dynamics to shape innovation scope is limited, particularly in emerging economies. This study investigates how digital transformation affects innovation boundaries and the moderating roles of supply chain concentration and transparency. Analyzing panel data from Chinese listed companies between 2007 and 2022, we employ multiple regression models and address endogeneity through instrumental variables and Heckman selection approaches. Results indicate that digital transformation considerably expands innovation boundaries, exacerbated by customer and supplier concentration. Supply chain transparency further amplifies this relationship, highlighting the value of information visibility. Notably, the impact of digital transformation is more pronounced in nonhigh-tech and nonheavily polluting industries, calling into question conventional wisdom about technology adoption benefits. These findings advance innovation management theory by demonstrating how supply chain characteristics shape firms' ability to leverage digital technologies for innovation, while offering practical insights for managers seeking to optimize their digital transformation strategies.

Keywords: Digital transformation; Innovation boundary; Customer concentration; Supplier concentration; Supply chain transparency (search for similar items in EconPapers)
JEL-codes: G34 L22 M15 O32 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:98:y:2025:i:c:s1057521925000092

DOI: 10.1016/j.irfa.2025.103922

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