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Open AccessArticle

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

1
Management School, Jinan University, Guangzhou 510632, China
2
Department of Management, College of Business Administration, Kansas State University, Manhattan, KS 66506, USA
*
Author to whom correspondence should be addressed.
Sustainability 2018, 10(5), 1658; https://doi.org/10.3390/su10051658
Received: 19 April 2018 / Revised: 16 May 2018 / Accepted: 18 May 2018 / Published: 21 May 2018
(This article belongs to the Special Issue Toward Sustainability: Supply Chain Collaboration and Governance)
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. View Full-Text
Keywords: sustainability development; sustainable supply chain; joint decision making; manufacturer–retailer relationship sustainability development; sustainable supply chain; joint decision making; manufacturer–retailer relationship
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Xu, Y.; Yoon, J.; Kim, M.K.; Sheu, C. Toward Supply Chain Sustainability: Governance and Implementation of Joint Sustainability Development. Sustainability 2018, 10, 1658.

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