AI enhances supply chain resilience by mitigating geopolitical risks through profit gains and efficiency.
Authors
Feng Dong, School of Economics and Management, Yanshan University, Qinhuangdao 066000, PR China
Xu Zhao, School of Economics and Management, Yanshan University, Qinhuangdao 066000, PR China
Sachin Kumar Mangla, Jindal Global Business School, O.P. Jindal Global University, India; Plymouth Business School, University of Plymouth, UK
Malin Song, Collaborative Innovation Center for Ecological Economics and Management, Anhui University of Finance and Economics, Bengbu 233030, PR China
Summary
This paper examines the impact of artificial intelligence (AI) on supply chain resilience (SCR) under geopolitical risks (GPR) through a tractable research framework and empirical analysis. We first develop a general equilibrium model with stochastic supply chain shocks to specify the underlying economic mechanism. The results show that the existence of geopolitical factors will increase the risk cost of firms maintaining supply chain relations, thus weakening SCR. However, the significant cost reductions, efficiency gains, and improvement of contractual completeness resulting from AI greatly empower firms to increase profits, thereby mitigating the disruption of uncertain risks to the supply chain, which leads to enhanced SCR. AI could mitigate the negative effects of GPR to a certain extent, but this depends on the relative magnitude of the positive and negative incentive effects of AI. We then perform two-way fixed effects estimations using data on Chinese listed firms. The empirical results validate our main theoretical analysis and confirm the role of firm profit as a bridge between AI and SCR, along with its attendant premise. Our further exploration confirms the moderating effect of AI in high-tech and high-competition industries, which may be attributed to the predominance of positive incentive effects of AI. Finally, our analysis results call for firms to strike a balance between the breadth and depth of AI applications, thus comprehensively strengthening the ability of the supply chain to cope with uncertainty.
Published in: Transportation Research Part E: Logistics and Transportation Review
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