Abstract: Firms highly dependent on a few big customers are likely to face higher operating risk and weakening profitability. Then, can a firm reshape its relationship with big customers through digital transformation to reduce its dependence on big customers ultimately? This paper constructs an index of firm digital transformation using text mining technology. Based on the data of listed Chinese manufacturing firms, we find that digital transformation helps a firm to sense customers’ needs, seize and retain customers, and reduce the firm’s costs of providing products and services for more broad and more diversified customers, thus significantly reduces a firm’s dependence on a few big customers by broadening the firm’s customer base. The influence of digital transformation on a firm’s dependence on big customers is related to the firm’s product characteristics: the lower product standardization, the higher product innovation, and product demand uncertainty, the more helpful digital transformation will be in reducing the firm’s dependence on big customers. This study reveals the antecedents of a firm’s dependence on big customers from a new perspective of digital transformation, which not only complements current studies that pay little attention to the antecedents of a firm’s dependence on big customers, but also has important practical implications for firms to reduce their dependence on big customers through digital transformation.

Key words: digital transformation, customer relationship, dependence on customer, product characteristics