Amid growing uncertainty in global supply chains, firms that continue to rely solely on internal resources and established operating models are finding it increasing difficult to maintain a long-term competitive edge. A study by The Hong Kong Polytechnic University (PolyU) finds that, in the face of multiple challenges, including geopolitical risks, cost volatility and increasingly stringent environmental regulations, businesses must strengthen the dynamic capabilities of their supply chains, deepen value co-creation mechanisms, and embrace digital transformation to effectively enhance supply chain resilience and overall competitiveness.
The study was led by Prof. Mike LAI Kee-hung, Co-Director of the Research Centre for Environmental, Social, and Governance Advancement, Associate Dean (Academic Support) of the Faculty of Business, Interim Head of the Department of Logistics and Maritime Studies, and Chair Professor of Shipping and Logistics. The research identifies three core dimensions of supply chain dynamic capability. The first is sensing capability, that is, a firm’s ability to identify external risks and potential opportunities at an early stage. The second is adaptive capability, i.e., the ability to respond swiftly and make effective decisions during crises or sudden changes in the operating environment. The third is reconfiguring capability, which refers to the capacity to flexibly adjust supply chain resource allocation and operating models in response to shifts in both internal and external environments.
The study further highlights that dynamic capabilities do not necessarily lead to innovation performance or competitive advantage. Their impacts must be realised through the process of value co-creation. Specifically, firms need to build closer collaborative relationships with suppliers, customers and logistics partners. Through joint product design, process optimisation and information sharing, capabilities at the individual firm level can be extended across the wider supply chain network, thereby fostering knowledge integration, resource coordination and innovative outcomes.
The study also finds that digital transformation plays a significant reinforcing role in this process. The higher a firm’s level of digitalisation, the greater its efficiency in information flows, cross-organisational coordination and supply chain transparency. This, in turn, enhances the effectiveness of value co-creation and further amplifies the positive impact of dynamic capabilities on innovation and performance. In other words, digital technology is not merely a tool for improving operational efficiency, but also a critical enabler of collaborative innovation and strategic transformation across supply chains.
The study emphasises that future market competition will no longer be confined to rivalry between individual firms, but will instead centre more on multi-faceted competitions between supply chain ecosystems in terms of collaborative capability, resilience and innovation performance. Firms that can effectively integrate dynamic capabilities, value co-creation and digital transformation will therefore be better placed to build sustained competitive advantage in a highly uncertain external environment and to strengthen their leadership within the wider industrial ecosystem.
Online coverage:
HK01 - https://polyu.me/4vpkmpl
| Research Units | Research Centre for Environmental, Social, and Governance Advancement |
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