Spillover effect of corporate digitalization in the supply chain: Perspective of trade credit financing

Abstract

We investigate the degree of digitalization required to gain a competitive advantage in the supply chain by developing a firm-specific metric based on firm disclosure. Using a 2011–2020 sample of Chinese listed firms, we examine whether improving corporate digitalization can bring more trade credit financing from the supply chain. Our findings indicate that firms acquire more trade credit after increasing their level of digitalization, despite the low pressure of credit rationing. Furthermore, digitalization improves operation, research and development, and governance efficiency, giving such firms a competitive advantage. Cross-sectional analyses indicate that specific characteristics, such as a large firm size, state-owned property, traditional industry type, stable macropolicy environment, high industry status, and transparent internal information environment, can bolster this competitive advantage. In general, we highlight the role of digitalization in improving firms' competitiveness in the supply chain from the perspective of trade credit financing.