Toward Supply Chain Sustainability: Governance and Implementation of Joint Sustainability Development

Yongmei Xu, Jiho Yoon, Myung Kyo Kim and Chwen Sheu
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Yongmei Xu: Management School, Jinan University, Guangzhou 510632, China
Jiho Yoon: Department of Management, College of Business Administration, Kansas State University, Manhattan, KS 66506, USA
Myung Kyo Kim: Department of Management, College of Business Administration, Kansas State University, Manhattan, KS 66506, USA
Chwen Sheu: Department of Management, College of Business Administration, Kansas State University, Manhattan, KS 66506, USA

Sustainability, 2018, vol. 10, issue 5, 1-26

Abstract: The extant sustainability literature has argued that supply chain (SC) members can gain both financial and operational benefits from a joint sustainability development (JSD) effort. However, no guidance has been provided on how SC members could collaborate on their sustainability development efforts to achieve the intended economic performance. This study addressed this research gap by proposing different contractual governances, based on a game-theoretic approach, for both manufacturer and retailer to better engage in JSD. Specifically, multiple JSD contractual arrangements regarding profit and associated cost sharing between manufacturers and retailers were defined and evaluated. Our analyses show that the manufacturer behaves opportunistically when the impact of a retailer’s effort on consumer demand is low. In other words, the retailer increases its sustainability effort, but not the manufacturer. However, such opportunistic behavior can be removed under a revenue sharing arrangement. That is, the manufacturer becomes cooperative with the retailer, and both retailer and manufacturer increase their JSD efforts. Several numerical experiments were conducted to assess the effectiveness of various revenue sharing arrangements (no sharing, partial profit sharing, and total profit sharing) in devising and implementing a mutually beneficial JSD program. Accordingly, several guidelines for the SC JSD implementation are provided.

Keywords: sustainability development; sustainable supply chain; joint decision making; manufacturer–retailer relationship (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 (2)

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Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:10:y:2018:i:5:p:1658-:d:148154

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