Digital Transformation, Supply Chain Spillovers and Corporate Innovation Capabilities

: Advancing digital transformation has become a consensus and trend in the industry. Using data from China’s Shanghai and Shenzhen A-share listed companies from 2010 to 2022, this study investigates the spillover effects of digital transformation in China’s manufacturing industry and its impact on the innovation capabilities of midstream enterprises within supply chains. The findings reveal that downstream enterprises’ digital transformation significantly enhances the innovation capabilities of midstream manufacturing firms by increasing cash flow and strengthening IT capabilities. However, upstream firms’ digital transformation does not show a significant positive impact, as it often focuses on internal process optimization and cost control, with limited spillover effects along the supply chain. Furthermore, the study explores the heterogeneity of these spillover effects at both micro and macro levels. Results indicate that non-state-owned enterprises, firms with highly innovative leadership, high ESG scores, and those located in regions with strong innovation capabilities and advanced digital economies benefit more significantly from digital transformation. This paper identifies the transmission pathways of digital transformation spillovers in supply chains, offering insights and references for supply chain enterprises to implement digital transformation effectively.