Operational Decisions on Remanufacturing Outsourcing Involved with Corporate Environmental and Social Responsibility—A Sustainable Perspective

Wei Yan, Junwu Chai, Zhifeng Qian, Sang-Bing Tsai, Hong Chen and Yu Xiong
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Wei Yan: School of Management and Economics, University of Electronic Science and Technology of China, Chengdu 611731, China
Junwu Chai: School of Management and Economics, University of Electronic Science and Technology of China, Chengdu 611731, China
Zhifeng Qian: School of Management and Economics, University of Electronic Science and Technology of China, Chengdu 611731, China
Sang-Bing Tsai: Zhongshan Institute, University of Electronic Science and Technology of China, Zhongshan 528400, China
Hong Chen: School of Management and Economics, University of Electronic Science and Technology of China, Chengdu 611731, China
Yu Xiong: Newcastle Business School, Northumbria University, Newcastle Upon Tyne NE1 8ST, UK

Sustainability, 2018, vol. 10, issue 4, 1-18

Abstract: Due to increasing consciousness of sustainability and pressure from legislation, numerous studies and managers have sought to integrate traditional operations management with green environment and social responsibility. One such effort is remanufacturing, which has emerged as a growing topic. Although outsourcing remanufacturing operations to third-party remanufacturers (TPRs) has been well studied in the literature, the research has paid little attention to the fact that original equipment manufacturers (OEMs) have the flexibility of outsourcing to other agents but not TPRs. In practice, besides TPRs, many brand-name OEMs have outsourced remanufacturing operations to their suppliers. The question this raises is: TPR vs. supplier, which remanufacturer is better for the economic, environment and social responsibility? To understand this fundamental question, in this paper, we develop two models that allow an OEM to have potential flexibility to (1) outsource remanufacturing operations to a TPR (Model T) or (2) outsource remanufacturing operations to a supplier (Model S). Among other results, we find that, although the Model T creates more potentially sustainable economic, social, and environmental situations, this strategy is not supported by the supplier because it always leaves the supplier worse off. In order to achieve a “win-win-win” outcome that meets economic, social, and environmental requirements for all parties, a revenue-sharing contract is proposed and incorporated into Model T.

Keywords: green operations; environmental impacts; remanufacturing outsourcing; coordination contract; game theory (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:10:y:2018:i:4:p:1132-:d:140346

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