Competitive environmental sourcing strategies in supply chains

Junsong Bian and Xuan Zhao

International Journal of Production Economics, 2020, vol. 230, issue C

Abstract: This paper studies retailers' environmental sourcing strategies in supply chains by taking into consideration environmental quality investment and consumers' environment awareness. We attempt to identify the equilibrium sourcing strategies in two scenarios: with and without supplier competition, respectively. We find that environmental sourcing always arises, and the suppliers' incentives are also in line with the retailers’ sourcing strategies in equilibrium. However, adding more environmental sourcing channels does not necessarily benefit consumers and the whole society. Interestingly, retailers have better incentives to select environmental sourcing channels when supplier competition is present. In fact, even without risk consideration, we show that retailers should diversify procurement by choosing different suppliers, which better promotes environmental sourcing and enhances consumer welfare, if the synergy effect is weak or environmental investment is sufficiently inefficient. We also examine the supplier-initiated sourcing strategies and find that the equilibrium strategies depend upon factors including the synergy effect and environmental investment efficiency.

Keywords: Supply chain management; Environmental sourcing strategy; Sustainable operations; Distribution channels; Game theory (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:proeco:v:230:y:2020:i:c:s0925527320302541

DOI: 10.1016/j.ijpe.2020.107891

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