Can Digital Transformation Break the Constraint of Geographical Distance?Evidence from the Geographical Distribution of Firms'Supply Chains
The"gravitational effect"of geographical distance on trade is one of the most explicit and robust findings in traditional trade research.In recent years,as digital technology has developed,the trade barriers caused by geographical distance seem to be gradually broken down.Digital economy takes knowledge and information as elements,and empowers enterprises with digital technology to produce,develop and transform,which is profoundly changing and reshaping current business activities.More and more scholars argue that digital technology has enabled enterprises to get rid of the"law of gravity"in trade,and geographical distance is dying in the digital age.While this view is popular,some scholars have raised objections and pointed out that the impact of geographical distance on trade has not diminished over time.Contrary to intuition,the world is not getting dramatically smaller and distance is becoming more important.The above research controversies prompt us to re-examine the traditional proposition of geographical distance and corporate trade,and try to answer the questions:In the digital age,does the digital transformation really perish the distance effect?If not,what are the reasons behind it?Are there differences in the effects of digital transformation in different external situations?Which digital interaction mode between enterprises can help them further break through the limitation of geographical distance?In view of this,by extending the theoretical model of Freund and Weinhold(2004),and based on the geographical distribution data of firms'supply chain,this paper examines the impact of digital transformation on firms'trade scale and trade geographical structure to reveal the relationship between digital technology application and geographical distance.It is found that the digital transformation has not changed the locally rooted trade geography structure of firms while expanding their trade scale,and that the distance effect is weakened but not completely died out by digital technology.The analysis of the reasons shows that digital transformation expands the trade scale of firms by reducing the transaction costs caused by geographical distance,but it does not change the geographical structure of firms'transaction costs,so it cannot change the geographical structure of firms'trade.Moreover,the"cost reduction"effect of digital transformation is relatively limited in the heterogeneous products,the heavy industries and the western region.Further research finds that digital transformation accelerates the speed of factor mobility without changing the regional structure of factor mobility,and only in the high-bilateral digital interaction modes can firms further break through the constraints of geographical distance.The possible contributions of this paper are as follows.First,this paper uses highly segmented micro-level supply chain geographical distribution data to carry out analysis,revealing that there is still a"gravitational effect"between geographical distance and enterprise trade in the digital era.Second,from the perspective of trade cost structure,this paper provides a new explanation for the argument that digital technology does not lead to the death of distance.Finally,this paper provides theoretical support for the government's strategy of building a digital China from the perspective of breaking through geographical constraints,and provides enlightenment for a deep understanding of the important role of bridging the"digital divide"in helping the construction of a unified national market and the free flow of factors.According to the research conclusions,this paper puts forward the following policy recommendations.First,high emphasis should be placed on the important role of digital transformation in reshaping business activities to promote enterprises to implement digital transformation strategies.Second,to be aware of the boundaries of the role of digital enabling effects,it is important to continue to adhere to the strategy of transportation power while promoting the digital strategies.Third,to actively bridge the digital gap between enterprises and effectively advance the bilateral digital transformation of enterprises.
digital transformationgeographic distancetrade scaletrade geographic structuretransaction cost
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