This study investigates how digital transformation influences corporate breakthrough innovation through supply chain spillovers. Using data from Chinese listed companies between 2006 and 2023, we find that upstream digital transformation significantly promotes downstream breakthrough innovation via three mechanisms: knowledge spillover, digital peer effects, and information synergy, the latter helping to mitigate the bullwhip effect. Robustness checks confirm the reliability of these results. Heterogeneity analyses reveal that the effect is stronger for firms with high absorptive capacity, operating in highly competitive industries, or with concentrated supplier bases. In contrast, downstream digital transformation also affects upstream firms, but the spillover is weaker, asymmetric, and operates only through peer effects. These findings enrich the literature on supply chain dynamics and innovation, offering practical insights for firms to harness digital synergy to expand their innovative capabilities.
Luo et al. (Wed,) studied this question.
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