Does buyer digitalization boost supplier efficiency? The role of supplier absorption capacity and common institutional investors

Purpose Driven by digital technologies, enterprise competition has shifted from individual efficiency to the entire supply chain. Grounded in the relational view of competitive advantage, this study analyzes how buyer digitalization affects supplier operational efficiency. It further examines the moderating roles of supplier absorptive capacity (AC) and common institutional investors (CIIs). Design/methodology/approach Our sample consists of disclosed supplier–buyer relationships involving China's A-share listed firms between 2011 and 2024, sourced from the China Stock Market & Accounting Research Database. To measure operational efficiency, we utilize stochastic frontier estimation. We then apply a two-way fixed effects model to analyze how buyer digitalization impacts supplier operational efficiency and examine the moderating roles of supplier AC and CIIs by incorporating relevant interaction terms. Findings Buyer digitalization enhances supplier operational efficiency. This effect occurs through the two key channels of technological spillovers and informational spillovers. The relationship is strengthened by greater supplier absorptive capacity and a larger common ownership held by CIIs. Originality/value This study clarifies how relational rents are created between buyers and suppliers within supply chain digitalization, extending the relational view. It underscores AC's importance in digital spillovers and the role of CIIs as an effective governance mechanism, enriching interdisciplinary research between corporate governance and supply chain management.