Does digital transformation promote supply chain efficiency? Evidence from China

Abstract With the deepening of industrial division of labor, supply chain efficiency has become a critical driver of companies' core competitiveness. Using a sample of Chinese A‐share listed companies from 2007 to 2023, this paper empirically investigates the impact of digital transformation on supply chain efficiency. We find that firms with a higher degree of digital transformation are associated with higher supply chain efficiency. Mechanism tests show that digital transformation facilitates supply chain efficiency via lower customer demand uncertainty as well as raw material disruption risk. The positive effect of digital transformation is more pronounced for non‐state‐owned enterprises and for firms with less stable customers and more geographically dispersed suppliers. Moreover, there is much degree prompt in supply chain efficiency for firms located in a better digital environment. This paper sheds light on how digital transformation influences supply chain efficiency and provides significant insights for firms to improve supply chain efficiency.