The differentiated roles of digitalization in firms’ value chain activities: a double-edged sword?

Abstract

Purpose

Building on the value chain model, this study develops a theoretical framework to illustrate the associations between digitalization and firms’ value chain activities from three typical dimensions including R&D investment, manufacturing cost efficiency and marketing cost efficiency. The roles of unabsorbed and absorbed slack resources in their relationships are also examined.

Design/methodology/approach

Based upon a large sample of Chinese manufacturing firms from 2016 to 2020 and then employing text mining-based analysis and the multiple regression model, this study empirically tests the effects of digitalization on firms’ value chain activities and how these effects are moderated by slack resources.

Findings

The findings show that increase in digitalization leads to an increase in firms’ R&D investment and a decline in manufacturing cost, but results in an increase in marketing cost. In addition, the unabsorbed slack resources and absorbed slack resources play differentiated roles in the associations between digitalization and these value chain activities.

Originality/value

This study contributes to the debate on how digitalization facilitates or hinders the value increment by employing the value chain model and further analyzing the impacts of digitalization on three value chain dimensions: R&D investment, manufacturing cost efficiency and marketing cost efficiency. This study extends the possibility that the influences of digitalization on different value chain dimensions may vary depending on some key contingency factors such as unabsorbed and absorbed slack resources.

Citation

Tian, M., Huang, W. and Hu, C. (2024), "The differentiated roles of digitalization in firms’ value chain activities: a double-edged sword?", Industrial Management & Data Systems, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/IMDS-03-2024-0209