Government procurement and corporate supply chain resilience: evidence from a reduction in disruptions

In the context of the heavy setback of economic globalization, exploring how to increase the resilience of corporate supply chains has obvious theoretical and practical significance. This study examines the association between government procurement and corporate supply chain resilience using an Ordinary Least Squares (OLS) regression model. The results suggest that government procurement may contribute to supply chain resilience of firms. Moreover, this positive effect is more pronounced for firms with high tax incentives and low government subsidies; firms with better market environments; firms that are capital-intensive and technology-intensive; firms producing construction products and other products; firms with greater need for assistance; firms with local clients, large clients, and groups of clients with non-permanent relationships; and firms without shared business relationships. Mechanism tests demonstrate that government procurement tends to increase resilience through the reputational spillover effect and quality enhancement effect. Further analysis indicates that government procurement, through the supply chain transmission mechanism, has a ‘profit-increasing’ effect on upstream suppliers, whereas for downstream clients, it generates a double spillover effect of ‘stabilizing the chain’ and ‘depressing profits’. In particular, the downstream double spillover effect is more prominent in firms with stronger supply chain resilience.