How does digitalization alter the paradox of supply base concentration? The effects of digitalization intensity and breadth

Abstract

PurposeThe highly uncertain and turbulent environments nowadays intensify the paradoxical effects of supply base concentration (SBC) on improving cost efficiency while increasing idiosyncratic risk (IR). Digitalization is regarded as a remedy for this paradox, yet digitization's potentially curative effect has not been empirically tested. Leveraging the lenses of paradox theory and information processing theory (IPT), this study explores how two distinct dimensions of digitalization, i.e. digitalization intensity (DI) and digitalization breadth (DB), reconcile the paradoxical effects of SBC.Design/methodology/approachUsing a panel dataset of 1,238 Chinese manufacturing firms in the period of 2012–2020, this study utilizes fixed-effects regression models to test the proposed hypotheses.FindingsThe authors discover that SBC enhances a firm's cost efficiency but induces greater IR. More importantly, there is evidence that DI restrains the amplifying effect of SBC on IR. However, DB weakens the enhancing effect of SBC on cost efficiency and aggravates the SBC's exacerbating effect on IR.Originality/valueThis study advances the understanding of the paradoxical effects of SBC on cost efficiency and IR from a paradox theory perspective. More importantly, to the best of the authors' knowledge, the authors' study is the first to untangle the differential roles of DI and DB in reconciling the paradox of SBC. This study also provides practitioners with nuanced insights into how the practitioners should use appropriate tactics to deploy digital technologies effectively.

Digitalization in lean manufacturing firms: a cumulative capability development perspective

“…, 2023)) went beyond a singular digital technology. The digitalization intensity [referred to as the degree of use of a type of digital technology (Yang et al. , 2023)] was another important aspect to consider.…”

“…Given that our unit of analysis is the digitalization initiative in each of the firms, we selected firms that were engaging in digitalization initiatives, involving the use of digital technologies that were new to the firms. Each firm's digitalization efforts comprised an array of different digital technologies (see Table 1), such that their digitalization breadth (defined as the number of types of digital technologies adopted (Yang et al, 2023)) went beyond a singular digital technology. The digitalization intensity [referred to as the degree of use of a type of digital technology (Yang et al, 2023)] was another important aspect to consider.…”

“…Each firm's digitalization efforts comprised an array of different digital technologies (see Table 1), such that their digitalization breadth (defined as the number of types of digital technologies adopted (Yang et al, 2023)) went beyond a singular digital technology. The digitalization intensity [referred to as the degree of use of a type of digital technology (Yang et al, 2023)] was another important aspect to consider. We deemed it crucial to focus on specific digital technologies exhibiting digitalization intensity to ensure in-depth use and continued entrenchment of the technology within the firm (Yang et al, 2023).…”

“…The digitalization intensity [referred to as the degree of use of a type of digital technology (Yang et al, 2023)] was another important aspect to consider. We deemed it crucial to focus on specific digital technologies exhibiting digitalization intensity to ensure in-depth use and continued entrenchment of the technology within the firm (Yang et al, 2023). Correspondingly, we refrained from examining diverse digital technologies that were merely in the trial stage or used sporadically.…”

Antecedent configurations toward supply chain resilience: The joint impact of supply chain integration and big data analytics capability

“…Second, managerial skills involve linking the big data function with other departments (Gupta & George, 2016), embodying the application of big data technology into various aspects of operations, such as finance, marketing, manufacturing, and supply chain. To assess managerial skills, we calculate the frequency of words about big datarelated practices in the "Management Discussion and Analysis" part of corporate annual reports using the Python-based text mining (Yang et al, 2023). (See Table 4.1 in Supporting Information for the list of terms/words used in the text mining process.)…”