Enterprise digital transformation and customer concentration: An examination based on dynamic capability theory

Area of Science:

• Business Management
• Information Systems
• Innovation Studies

Background:

• Traditional enterprises face risks from over-reliance on single customers.
• Enterprise digitalization's impact on customer relationships requires further investigation.
• Dynamic capability theory provides a framework for understanding these internal mechanisms.

Purpose of the Study:

• To explore the internal mechanisms through which enterprise digital transformation reduces dependence on large customers.
• To construct and empirically test a conceptual model linking digital transformation, innovation capability, operational cost, and customer satisfaction.
• To provide insights for diversifying customer structures and mitigating business risks.

Main Methods:

• Utilized dynamic capability theory to build conceptual models.
• Empirically studied Chinese listed companies (2011-2019) using keyword search statistics from annual reports.
• Employed propensity score matching (PSM) and instrumental variable methods to address endogeneity.

Main Results:

• Digital transformation significantly reduces large customer concentration and drives business model innovation.
• Key mechanisms include improved innovation capabilities, reduced operational costs, and increased customer satisfaction.
• Effects are more pronounced in non-state-owned enterprises, those with active customer interactions, and in digitally advanced regions.

Conclusions:

• Digital transformation is a powerful strategy for diversifying customer bases and reducing business risks.
• Findings enrich dynamic capability theory by highlighting innovation and customer satisfaction effects.
• Provides actionable insights for enterprises navigating the digital economy.