The impact of digital technology deployment on mitigating supply chain disruptions: Evidence from Chinese automotive manufacturers during the COVID-19 crisis

Abstract

Digital supply chain management provided opportunities to mitigate the effects of supply chain disruptions on business activities. Unfortunately, the real-life impacts of digital technology deployment in mitigating supply chain disruptions and enhancing resilience have not been fully evaluated, and it is unclear which digital technology deployment strategy had the greatest effect on firms' operations. This research seeks to fill this gap using data from the annual reports of 123 Chinese automotive manufacturers during the COVID-19 crisis. We focus on two dimensions of digital technology deployment: amount and category. Metrics describing financial and operational performance are used to estimate firms' overall performance. Additionally, this research presents econometric models to assess the effects of digital technology deployment from the two aforementioned dimensions. We found that the deployment of digital technology assets could mitigate negative effects on firms' performance during COVID-19 crisis, albeit with a time lag. Different categories of digital technology deployment, however, had different effects on firms' financial and operational performance. Digital front-end technologies were more efficient in improving the financial performance of the automotive firms. Meanwhile, digital base technologies were more impactful on the firms’ operational performance. This research contributes to the body of research on digital SCM and supply chain risk management by examining the effect of digital technologies from a dynamic capability perspective.