Digital technology innovation and supply‑chain risk: evidence from financial and operational channels

Firms commonly manage supply‑chain risk by tightening trade credit, holding safety stocks and maintaining spare capacity. These buffers, however, restrict transactions and tie up working capital. This article examines, through the lens of information frictions, how digital technology innovation is associated with supply‑chain risk and firms’ approaches to risk governance. Using Chinese A‑share listed firms from 2007 to 2023, two‑way fixed‑effects estimates show that digital technology innovation is significantly associated with lower supply‑chain risk. The financial‑channel results show that digital technology innovation is associated with larger accounts‑receivable balances, a lower bad‑debt provision ratio and a lower expected default probability for suppliers. The operational‑channel results show that digital technology innovation is associated with lower inventory holdings and inventory impairment risk, higher capacity utilization and faster inventory turnover. The negative association between digital technology innovation and supply‑chain risk is more pronounced where digital infrastructure is more developed, workforce educational attainment is higher and intellectual property rights are better protected.