Abstract:

Digital technologies have been increasingly applied to facilitate collaboration between supply chain partners， while the antecedents that affect firms’ decisions on digital transformation under the supply chain context have been rarely studied. It aims to investigate whether geographic distance between suppliers and their major customers， which is one of the important characteristics of supply chain relationship， should be a significant antecedent affecting suppliers’ digital transformation decision-making， that is， deciding whether they behave similar in digital transformation orientation to their major customers.Drawing on the transaction cost theory and social capital theory， it is proposed that geographic distance can positively affect the similarity of digital transformation orientation between suppliers and their major customers. To empirically analyse this relationship and the underlying mechanism， a quantitative way is created to measure the similarity of digital transformation orientation between suppliers and their major customers based on the text analysis method， and a panel data of supply chain pairs collected from Chinese listed firms is constructed. Exogenous shocks and mechanism validations are also designed to establish the causality of the relationship between geographic distance and the similarity of digital transformation orientation.The findings show that geographic distance indeed positively drives suppliers to adopt similar digital transformation orientation with their major customers. This result is robust after a series of additional analyses. Mechanism analysis shows that geographical distance increases the disruption risk of supply chain relationship. In order to reduce the disruption risk of relationship with major customers， suppliers tend to make more relationship commitments， and thus actively follow major customers to adopt similar digital transformation orientation. Furthermore， the positive relationship between geographic distance and the similarity of digital transformation orientation could be weakened when suppliers are non-state-owned firms， when the board independence of suppliers are high， and when collaborating with high-profitable customers. Additionally， customer significance has an inversed U-shape influence on the above relationship.It contributes to the literature in the following ways. Firstly， it adds to the growing literature on digital transformation. It clarifies that the characteristics of supply chain relationship are important antecedents affecting firms’ digital transformation orientation， and deciding whether firms would behave similar to their customers in digital transformation orientation. Furthermore， it contributes to the literature by constructing a quantitative measure to estimate the degree of the similarity of digital transformation orientation between suppliers and customers based on the text content analysis method. Secondly， it enriches the literature on the important roles of geographic distance away from major customers in affecting firms’ strategic decision-making from the view of digital transformation orientation. Finally， it reveals that the disruption risk of supply chain relationship is an important driving force of geographic distance affecting firms’ digital transformation orientation， and thus deepens the understanding that firms would actively strengthen the similarity with customers in digital transformation orientation to cope with the disadvantages caused by a long-distance relationship.

Key words: supply chain relationship, major customers, geographic distance, digital transformation orientation