Building operational resilience through digitalization: The roles of supply chain network position

Abstract

Firms with high operational resilience tend to have greater stability and recoverability, and are able to remain competitive in complex and changing market environments. However, whether digitalization can build operational resilience and how firms can further benefit from it remains to be studied. Based on the dynamic capability view and network embeddedness theory, this study investigates how digitalization (internal factor) and supply chain network position (external factor) influence operational resilience of Chinese firms during the Covid-19 pandemic. We measure operational resilience by disruption absorption and recoverability. Using the data of listed firms in the China A-share market from 2016 to 2022, we find that digitalization can enhance operational resilience by improving sensing and seizing capabilities, and increase operational recoverability by enhancing reconfiguration capabilities during the pandemic. Furthermore, social network analysis indicates that firms with higher centrality or span more structural holes in the supply chain network have information, resource and control advantages and therefore benefit more from digitalization in improving operational resilience. Our findings provide theoretical and practical implications for managers to leverage digitalization and network position to cope with unprecedented shocks in the post-pandemic era.