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For China, a country in a period of transition and development, the steep transaction costs incurred by the imperfect external market transaction system has forced firms to rely more on the supply chain relationship network in transactions, thus giving rise to the relationship-based transaction model. Relationship-based transactions have unique Chinese characteristics, and their prevalence is a significant feature that distinguishes Chinese companies from those in developed Western countries (market-based transactions).
According to the 2020 China Stock Market & Accounting Research Database (CSMAR), the proportion of relationship-based transactions in the sales of the top five suppliers and top five customers of listed manufacturing companies in China exceeded 30%, and about 1/5 of listed manufacturing companies even exceeded 50%. Undoubtedly, a stable supply chain relationship is essential for business development. However, it should not be ignored that an excessive proportion of relationship-based transactions may also lead to firms’ over-reliance on relationships, declined bargaining power, and increased business risks, which may have an adverse effect (Gosman & Kohlbeck, 2009; Hertzel & Zhi, 2008).
Substantial empirical evidence from Chinese firms indicates that relatively high levels of supply chain relationship-based transactions adversely affect firms in many aspects such as technological innovation, operational risk, and financial performance. Hence, effectively reducing the over-reliance on key suppliers (customers) has become an essential and realistic need of firms. Especially after the global outbreak of the COVID-19 pandemic, more and more firms have started to re-examine the issue of supply-chain transaction risks and are making reducing the risk of over-reliance on a single supplier (customer) a crucial goal of supply-chain strategy adjustment (Nawo & Njangang, 2022; Sharma, 2021). In this backdrop, how to free firms from over-reliance on relationship-based transactions effectively becomes an important issue to be solved expediently.
In recent years, driven by the twin wheels of the global new technological revolution and industry change, digital technologies represented by artificial intelligence (AI) and big data have flourished and rapidly become a new driver for the transformation and growth of firms. Increasingly more firms are trying to innovate their business models and gain further competitive advantages by implementing digital transformation. Digital transformation is the inevitable result of firms following the development law of the new global technological revolution in the microeconomic environment, which is essentially a process of firms implementing deep integration of digital technology and data elements with production factors such as capital, talent, and equipment (Vial, 2021; Yoo et al., 2010). This strategic transformation may have a significant impact on supply-chain transaction relationships.
On the one hand, digital transformation significantly reduces the information asymmetry between firms and the outside world, and provides more comprehensive and valuable information resources for them to participate in supply chain cooperation (Nambisan et al., 2018). On the other hand, digital transformation helps firms build a digital governance system (Lateef & Omotayo, 2019), which effectively monitors and restrains irrational managerial behaviors in supply chain decision-making. Therefore, digital transformation is not only effective in alleviating information asymmetry in supply chain cooperation and matching firms with more supply chain partners, but it is also conducive to alleviating the management’s career concerns in supply chain transactions and reducing their frequent dealings with familiar suppliers and customers out of self-interest, which may be an essential factor in reducing supply chain relationship-based transactions.