DOES SUPPLY CHAIN DIGITALIZATION BUFFER THE IMPACT OF GEOPOLITICAL RISK ON FIRM PERFORMANCE? EVIDENCE FROM MANUFACTURING FIRMS IN LAHORE, PAKISTAN

Abstract

Geopolitical uncertainty has become an important challenge for manufacturing firms because international conflicts, trade restrictions, exchange-rate volatility, and disruptions in cross-border logistics can increase production costs and weaken operational performance. These challenges are particularly relevant to manufacturing firms in Lahore, Pakistan, which operate within domestic and international supply networks and may depend on imported machinery, industrial inputs, technology, and raw materials. This study examines whether supply chain digitalization can reduce the adverse relationship between geopolitical risk and firm performance in Lahore’s manufacturing sector. Drawing on the resource-based view, dynamic capabilities theory, and organizational information processing theory, the study develops an analytical framework connecting geopolitical risk, digital supply chain capabilities, and firm performance. The research employs a structured analysis of relevant theoretical literature, recent empirical studies, and evidence concerning digital supply chain management in emerging economies. The analysis identifies procurement uncertainty, logistics disruption, rising input costs, and supplier dependence as important pathways through which geopolitical risk may affect manufacturing performance. Digital technologies, including enterprise resource planning systems, real-time tracking, predictive analytics, cloud-based information sharing, and artificial intelligence, may help firms improve supply chain visibility, responsiveness, and resource allocation. However, digitalization alone cannot eliminate geopolitical exposure, particularly when firms face financial constraints, limited technological expertise, or concentrated supplier networks. The study proposes that supply chain digitalization moderates the negative relationship between geopolitical risk and firm performance, with its effectiveness depending on organizational capabilities and implementation quality. The findings provide a theoretical foundation and practical direction for future empirical research involving manufacturing firms in Lahore.