Enhancing supplier flexibility through digital transformation: a dynamic capability perspective

Abstract

While supplier flexibility is crucial for enterprise resilience in uncertain environments, existing research remains inadequate in investigating its underlying drivers. This study addresses this gap by analyzing the influence of digital transformation (DT) on supplier flexibility through a dynamic capability perspective. Drawing on dynamic capability theory (DCT), this study examines the impact of DT on supplier flexibility and further explores the underlying mechanisms from the dual perspectives of product competitiveness and transaction costs. This study employs text mining method to construct a DT indicator and conducts multiple regression analysis to validate the theoretical propositions. The data sample comprises 5,750 firm-year observations from 1,566 listed enterprises in China between 2010 and 2022. The results reveal that DT significantly enhances supplier flexibility through improved product competitiveness and reduced transaction costs. This effect is moderated by macro-environmental (transport accessibility, resource allocation, institutional system) and micro-firm factors (development stages, bargaining power, inter-firm linkages). Moreover, supplier flexibility positively correlates with firm value under advanced DT. First, this study extends the supply chain management and strategic transformation literature by examining the impact of DT on supplier flexibility. Second, it enriches the understanding of how DT shapes firms' dynamic capabilities and enhances supplier flexibility by proposing a DCT-based framework. Furthermore, it provides strategic insights for tailoring digital initiatives to optimize supply chain management through the analysis of both macro-environmental and micro-individual moderators.