Digital strategy ripples : understanding the digital transformation cascade along the supply chain

Abstract

This paper investigates whether and why firms follow their customers and suppliers to adopt digital transformation (DT) strategies. Through textual analysis of quarterly conference calls, we find that firms adopt DT strategies following their suppliers and customers, indicating digital transformation cascades along the supply chain. Moreover, the DT alignment is stronger when focal firms face greater monitoring from “digital enthusiast” analysts and stronger digital transformation pressure from their industry peers. Additionally, long-term partners, firms from industries with advanced DT, and those centrally positioned within the supply chain network create a stronger ripple along the supply chain.