Supply chain digitalization has become a crucial strategy for firms as it allows businesses to harness the power of digital technologies to optimize their supply chain operations, improve efficiency, create new opportunities for innovation, and for sustainable development. COVID-19 pandemic has further emphasized the importance of supply chain digitalization, as it has disrupted global supply chains, resulting in significant challenges for businesses in terms of logistics, inventory management, workforce constraints, and demand forecasting. This study analyses the impact of digitalization on firm-level innovation performance during the pandemic. The results indicate that digital transformation spurs innovation. Furthermore, the government’s support for adopting digital technologies is an enabler of innovation performance.