Diffusion of digital transformation initiatives in multi-tier supply chains: The double agency role of Tier-1 suppliers

Abstract

Growing global supply chain complexity has generated interest in multi-tier management, yet most research focuses on focal firm and Tier–1 ties, overlooking Tier-2 dynamics. A specific gap exists in investigating Digital Transformation Initiatives (DTI) within triadic relationships among the focal firm and its Tier-1 and Tier-2 suppliers. This study addresses this gap by utilizing a multiple-case study approach across diverse sectors, drawing on 30 interviews, to examine the diffusion of DTI across multi-tier supply chains, with particular attention to the Double Agency Role (DAR) of Tier-1 suppliers. Using social capital theory and agency theory, our findings emphasize the key role of social capital in the DAR of Tier-1 suppliers. The importance of relational and cognitive capital varies as we shift from downstream to upstream segments of the supply chain. Relational capital is crucial in the downstream segment (focal firm–Tier-1 supplier), while cognitive capital grows in significance as we move upstream (Tier-1–Tier-2 suppliers). Additionally, we create a matrix to illustrate the relationships among social capital, the DAR, and the effectiveness of DTI diffusion. This study contributes to the digital transformation literature by expanding its focus from dyadic to triadic relationships. It also offers practical implications for supply chain managers, providing actionable insights to enhance the diffusion of DTI.