The Effect of Supply Chain Innovation and Application Pilot Program on the Competitive Advantage of Small and Medium-Sized Enterprises

Abstract

Stable and efficient supply chain relationships are essential for small and medium-sized enterprises (SMEs) to strengthen competitive advantage and achieve sustainable growth. However, how resource-constrained SMEs overcome internal resource constraints and enhance competitiveness through supply chain integration remains underexplored. Taking China’s Supply Chain Innovation and Application Pilot Program (SCIAPP) as a quasi-natural experiment, this study uses panel data of SMEs from 2014 to 2024 and employs a SCIAPP significantly improves SMEs’ competitive advantage (β1 = 0.016, p < 0.01). Mechanism analyses reveal that SCIAPP enhances competitive advantage by mitigating the bullwhip effect and increasing innovation investment. The positive effect is stronger for firms with higher supply chain dependence, for non-capital-intensive firms, and for smaller firms. Further analysis shows that improvements in competitive advantage contribute to higher firm value. This study extends research on SMEs’ competitive advantage by demonstrating how government-led supply chain governance facilitates capability development among resource-constrained firms. The findings also provide implications for policymakers seeking to improve supply chain governance and promote the high-quality development of SMEs.