How does digitalization alter the paradox of supply base concentration? The effects of digitalization intensity and breadth

Ziwei Yang, Wenjin Hu, Jinan Shao, Yongyi Shou, Qile He

Research output: Journal PublicationArticlepeer-review

9 Citations (Scopus)


The highly uncertain and turbulent environments nowadays intensify the paradoxical effects of supply base concentration (SBC) on improving cost efficiency while increasing idiosyncratic risk (IR). Digitalization is regarded as a remedy for this paradox, yet digitization's potentially curative effect has not been empirically tested. Leveraging the lenses of paradox theory and information processing theory (IPT), this study explores how two distinct dimensions of digitalization, i.e. digitalization intensity (DI) and digitalization breadth (DB), reconcile the paradoxical effects of SBC.

Using a panel dataset of 1,238 Chinese manufacturing firms in the period of 2012–2020, this study utilizes fixed-effects regression models to test the proposed hypotheses.

The authors discover that SBC enhances a firm's cost efficiency but induces greater IR. More importantly, there is evidence that DI restrains the amplifying effect of SBC on IR. However, DB weakens the enhancing effect of SBC on cost efficiency and aggravates the SBC's exacerbating effect on IR.

This study advances the understanding of the paradoxical effects of SBC on cost efficiency and IR from a paradox theory perspective. More importantly, to the best of the authors' knowledge, the authors' study is the first to untangle the differential roles of DI and DB in reconciling the paradox of SBC. This study also provides practitioners with nuanced insights into how the practitioners should use appropriate tactics to deploy digital technologies effectively.
Original languageEnglish
Pages (from-to)1690-1722
Number of pages33
JournalInternational Journal of Operations & Production Management
Issue number11
Publication statusPublished - 9 Jun 2023


  • Supply base concentration
  • Paradox
  • Digitalization
  • Information processing theory
  • Intensity
  • Breadth

ASJC Scopus subject areas

  • General Decision Sciences
  • Strategy and Management
  • Management of Technology and Innovation


Dive into the research topics of 'How does digitalization alter the paradox of supply base concentration? The effects of digitalization intensity and breadth'. Together they form a unique fingerprint.

Cite this