Surfing with the tides: how digitalization creates firm performance through supply chain entrainment

Abstract

PurposeDigitally oriented firms are faced with new opportunities and risks in today’s ever-changing world. Drawing upon organisational entrainment theory, this study investigates how supply chain (SC) entrainment improves the effects of digital orientation on firm performance through absorbing risks and exploiting opportunities.Design/methodology/approachSurvey data were collected from 307 Chinese manufactures and analysed using structural equation modelling and regression analysis.FindingsThe results show digital orientation absorbs risk through evoking three SC entrainment dimensions (i.e. internal entrainment, entrainment with customers and entrainment with suppliers). Entrainment with customers and suppliers mediate the relationship between internal entrainment and firm performance. An opportunity exploitation mechanism is evidenced by the moderating effects of internal and external entrainment on the relationship between digital orientation and firm performance.Practical implicationsThe empirical findings provide timely insights for managers to fully harness the benefits of digital orientation by using SC entrainment, i.e. to match the tempo and pace of internal and external cyclical activities to reduce the risks and increase the benefits of adopting advanced digital technologies. The authors show managers how to adjust their organization’s actions to keep tempo and synchronous phase with their SC partners.Originality/valueThe study introduces and conceptualizes a construct (i.e. SC entrainment) to understand how risks and opportunities arising from digital transformation can be addressed to maximize the value of advanced digital technologies.