Does supply chain efficiency accelerate firm innovation performance? An investigation in the digital transformation era

Despite growing interest in the positive role of supply chain efficiency (SCE), the impact of SCE on firm innovation performance (FIP) remains unexplored. Drawing on the learning-by-doing theory, this study investigates the relationship between SCE and FIP, with a focus on the moderating role of digital transformation. We conduct an empirical analysis using panel data from 3,063 firms listed on the Chinese A-share stock markets from 2006 to 2020. The findings reveal an inverted U-shaped relationship between SCE and FIP. Moderate efficiency fosters innovation performance, whereas excessive efficiency hinders it. In addition, the national digital transformation level moderates the relationship by flattening the curve and shifting the turning point to the right. Similarly, firm digital transformation level moderates the relationship by flattening the curve. This investigation provides a comprehensive view of the connection between supply chain practices and firm innovation and some managerial insights for improving innovation.