The Role of Business Environment and Digital Government in Mitigating Supply Chain Vulnerability—Evidence from the COVID-19 Shock

In recent years, the continuous spread of the COVID-19 epidemic has impacted the supply chain of enterprises. Mitigating the supply chain's vulnerability has great significance for the survival and development of enterprises. Optimizing the business environment and building a digital government will help improve the external environment for enterprise development. However, its impact on the vulnerability of the enterprise supply chain has yet to be studied. Taking the impact of COVID-19 as an example, this paper uses the survey data of nearly 40,000 enterprises of the National Federation of Industry and Commerce in 2020 and “10,000 private enterprises evaluating the business environment”, to conduct systematic empirical research and fill the research gap in this area. The study indicates that the business environment and digital government can significantly mitigate the impact of COVID-19 on the supply chain. This conclusion is still valid after a series of robustness tests. Mechanism analysis demonstrates that the business environment and digital government can prompt the government to introduce effective mitigation measures promptly, better guarantee production factors and logistics, and thus improve the vulnerability of the enterprise supply chain. This study deepens our understanding of the economic outcome of the business environment and digital government and also sheds new light on supply chain management.