TY - JOUR
T1 - Multinational firms’ local sourcing strategies considering unreliable supply and environmental sustainability
AU - Niu, Baozhuang
AU - Xie, Fengfeng
AU - Mu, Zihao
AU - Ji, Ping
N1 - Funding Information:
The authors are grateful to the managing editor and three reviewers for their helpful comments. The first author’s work was supported by NSFC Excellent Young Scientists Fund (No. 71822202 ), NSFC (No. 71571194 ), Chang Jiang Scholars Program (Niu Baozhuang 2017), GDUPS (Niu Baozhuang 2017). Fengfeng Xie is the co-first author. The corresponding author is Zihao Mu.
Funding Information:
The authors are grateful to the managing editor and three reviewers for their helpful comments. The first author's work was supported by NSFC Excellent Young Scientists Fund (No. 71822202), NSFC (No. 71571194), Chang Jiang Scholars Program (Niu Baozhuang 2017), GDUPS (Niu Baozhuang 2017). Fengfeng Xie is the co-first author. The corresponding author is Zihao Mu.
Publisher Copyright:
© 2019
PY - 2020/4
Y1 - 2020/4
N2 - After entering a new market (such as China and India), the full-fledged supply bases and networks (e.g., material, worker, logistics services, et al.) induce many multinational firms (MNFs) to produce and sell products using local materials. However, government's random environmental inspection, weather disaster, and other accidents have resulted in supply disruption for local sourcing. In this paper, we study how operational decisions such as pricing, ordering, and the selection of sourcing structure between Overseas Sourcing (OS) and Domestic Sourcing (DS) help improve supply chain sustainability. We study both the economic and environmental sustainability performances under alternative sourcing structures (OS and DS), where we identify a win-win situation. Interestingly, the MNF's profit difference between DS and OS is non-monotonic in its brand image advantage, because the domestic supplier might snatch the MNF's “brand value” using the pricing power, resulting a high local sourcing price. When the MNF's brand image advantage and the unit pollution/quantity ratio are both small, the MNF obtains more profits and incurs less pollutant under DS.
AB - After entering a new market (such as China and India), the full-fledged supply bases and networks (e.g., material, worker, logistics services, et al.) induce many multinational firms (MNFs) to produce and sell products using local materials. However, government's random environmental inspection, weather disaster, and other accidents have resulted in supply disruption for local sourcing. In this paper, we study how operational decisions such as pricing, ordering, and the selection of sourcing structure between Overseas Sourcing (OS) and Domestic Sourcing (DS) help improve supply chain sustainability. We study both the economic and environmental sustainability performances under alternative sourcing structures (OS and DS), where we identify a win-win situation. Interestingly, the MNF's profit difference between DS and OS is non-monotonic in its brand image advantage, because the domestic supplier might snatch the MNF's “brand value” using the pricing power, resulting a high local sourcing price. When the MNF's brand image advantage and the unit pollution/quantity ratio are both small, the MNF obtains more profits and incurs less pollutant under DS.
KW - Competition
KW - Sourcing strategy
KW - Supply disruption
KW - Sustainability
UR - http://www.scopus.com/inward/record.url?scp=85076696478&partnerID=8YFLogxK
U2 - 10.1016/j.resconrec.2019.104648
DO - 10.1016/j.resconrec.2019.104648
M3 - Article
SN - 0921-3449
VL - 155
JO - Resources, Conservation and Recycling
JF - Resources, Conservation and Recycling
M1 - 104648
ER -