A game theory analysis of trust and social capital in sustainable supply chain management

Fairchild, Richard and Alexander, Anthony 2014. A game theory analysis of trust and social capital in sustainable supply chain management. Presented at: British Academy of Management (BAM) Conference, Belfast, UK, 8-11 September 2014.

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Abstract

We consider the motivations of a customer-facing focal firm in a supply network regarding a choice between options for production methods and project direction. One option is purely economic, but with a negative social impact, while the other is a socially responsible alternative that entails a lower rate of economic return. In our game-theoretic analysis, the focal firm faces twin pressures: external pressure from its customers (who favour the pro-social option), and internal pressure from its network partners. After choosing the option for the project direction, all of the partners exert value-creating efforts: hence multi-sided moral hazard problems may exist in the form of effort-shirking. Social capital and trust within the network is enhanced by the choice of the social option, which mitigates the effort-shirking problem. Our analysis demonstrates that customer pressure and network social capital combine, and are substitutes, in inducing the focal firm to choose the pro-social option.

Item Type:	Conference or Workshop Item (Paper)
Date Type:	Publication
Status:	Published
Schools:	Business (Including Economics)
Subjects:	B Philosophy. Psychology. Religion > BF Psychology B Philosophy. Psychology. Religion > BJ Ethics H Social Sciences > HB Economic Theory H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management H Social Sciences > HF Commerce > HF5601 Accounting
Funders:	ESRC / BAM / SAMS
Date of First Compliant Deposit:	30 March 2016
Last Modified:	19 Nov 2024 06:30
URI:	https://orca.cardiff.ac.uk/id/eprint/64530

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