Implications of green optimism upon sustainable supply chain management

Minyue Jin, Xueqing Zhang, Yu Xiong and Yu Zhou

European Journal of Operational Research, 2021, vol. 295, issue 1, 131-139

Abstract: In recent years, managers have increasingly integrated sustainability into their business models. However, they might overestimate the premium that average consumers are willing to pay for the environment. In this paper, we formulate a game-theoretical model that illustrates the impacts of green optimism which refers to managers’ optimistic bias about consumer environmental awareness. We consider a sustainable supply chain in which one manufacturer invests in green product development and sells the green product through one retailer. Each firm within the supply chain is operated by one manager who is either realistic or optimistic. Contrary to conventional wisdom, we find that managers’ optimistic bias might discourage investment in green product development. We also find that green optimism is always detrimental to the upstream manufacturer, but might be beneficial to the downstream retailer. Surprisingly, under certain conditions, green optimism can be detrimental to all stakeholders, i.e., firms in the supply chain, consumers, and the environment. This study suggests an interesting link between supply chain management and human resource management; that is, within a sustainable supply chain those managers who are optimistic about the future of green business might be an obstacle to the success of green business.

Keywords: Supply chain management; Sustainability; Optimism; Game theory; Green product development (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (27)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ejores:v:295:y:2021:i:1:p:131-139

DOI: 10.1016/j.ejor.2021.02.036

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