Alleviating dependence: High-speed rail opening and firms' supply chain dependence

Abstract

Alleviating supply chain dependence (SCD) is important for maintaining long-term firm stability. Existing literature has gradually focused on the potential risks posed by firms' SCD, but research on how to alleviate SCD remains limited. We use data from 2433 listed manufacturing firms in China spanning the years 2003–2022. Using resource dependence theory and transaction cost theory, we examine the positive role of infrastructure development represented by high-speed railroads (HSR) in alleviating SCD. Our findings reveal that the opening of an HSR can alleviate SCD, but this effect is primarily observed in alleviating downstream large-customer dependence, with no significant impact on alleviating upstream large-supplier dependence. This effect is more pronounced in environments characterized by high levels of economic uncertainty and low levels of digital infrastructure. The opening of an HSR alleviates SCD mainly through two paths: enhancing the competitive market environment and reducing transaction costs. Furthermore, alleviating SCD contributes to enhanced firm resilience. Our research advances the understanding of the relationship between transportation infrastructure and supply chain management, offering insights for academics and practitioners on strategies to alleviate SCD.