Digital transformation and customer risk contagion: evidence from China-listed companies

The digital transformation of enterprises has become a prevalent trend in their development and evolution, and whether such transformations can mitigate supply chain risk has emerged as a critical issue warranting investigation. Using a dataset of Chinese listed companies from 2008 to 2022, this study explores how corporate digital transformation affects customer risk contagion based on organisational information processing theory. The empirical results show that enterprise digital transformation has a significant negative effect on customer risk contagion. The results exhibit robustness. Further investigation suggests that there are three channels through which the digital transformation of firms works; firstly, by reducing financial interdependence with customers through the reduction of trade credit; secondly, by reducing the impact of fluctuations in customer demand through improved inventory management proficiency. Thirdly, by mitigating information asymmetries and improving the ability of firms to discern information about customer risks. This study contributes to digital research and supply chain risk management.