The impact of digital infrastructure on the geographical supply chain layout of firms —— Evidence from Chinese microdata

Abstract

This study investigates how the development of digital infrastructure in China affects the geographical layout of supply chains of listed companies. This work finds that (1) The development of digital infrastructure has led to firms prefer suppliers or customers nearby, rather than looking for distant supply chain partners. (2) The development of digital infrastructure can reduce the costs of the firms, and improve their productivity. However, firms with cost reduction and productivity improvement will not expand the geographical scope of their supply chains. From the perspective of the concentration of supply chains, firms reduce their dependence on the top five customers and suppliers, indicating that with the support of digital technology, firms are willing to seek new partners to achieve closer and more diversified supply chains. (3) Heterogeneous analysis shows that firms with longer operational time, located in developed regions and eastern regions, or in primary and secondary sectors will choose a closer supply chain partner under the influence of digital infrastructure. (4) Extended analysis shows that digital infrastructure in neighboring cities will weaken the preferences of firms in those regions to find supply chain partners nearby.