The Impact of Supply Chain Digitalization on Firms' Performance: An Empirical Test of How Resource Specificity Explains the Digitalization Paradox

ABSTRACT Digitalization is a key driver of supply chain innovation. Existing literature has predominantly focused on the potential positive impacts of supply chain digitalization (SCD) on supply chain performance. However, the paradoxical effects of SCD on overall corporate performance have received limited attention. This study addresses this gap by employing paradox theory to analyze the paradoxical relationship between old specific resources and new specific resources brought by SCD. Econometric methods, panel data from 1440 Chinese listed companies, as well as a text mining approach are used to evaluate the impacts of SCD. This study finds that SCD generates dual effects on enterprises due to resource specificity. Aligning with the majority of existing research, this study confirms the positive impacts of SCD on supply chain capabilities. However, SCD also leads to resource redundancy within firms. The dynamic analysis further reveals that the overall impact of SCD on firm performance is initially nonsignificant but becomes positive over time. The distinctiveness of this study lies in its all‐encompassing approach to the effects of SCD by offering a paradoxical perspective. This study adds insights to supply chain literature and provides new explanations to the “digitalization paradox”. This study also has important practical implications for enterprises.