طراحی قرارداد های عرضه برای زنجیره تامین پایدار با استفاده از نظریه بازی Designing supply contracts for the sustainable supply chain using game theory

1. Introduction Sustainable supply chain management (SSCM) seeks to integrate economic, environmental, and social aspects in a supply chain (SC) (The Economist, 2009; Elkington, 1998). In recent times, SSCM is gaining attention among scholars and practitioners alike (Babbar et al., 2017; Lee and Tang, 2017). A practitioner’s inclination towards SSCM is primarily due to regulatory pressures, increasing customer awareness, and mounting pressure from various stakeholders. A recent study conducted jointly by the World Economic Forum1 and Accenture reveals that simultaneous adoption of socio-environmental and economic aspects in an organisation increases her revenue by 5-20%, brand value by 15-30% while at the same time greenhouse emissions can be reduced by 13-22 %. Many global firms such as Alcoa, PepsiCo, General Electric, Ford Motor Company, Nike, Exelon, PG&E, Starbuck’s, Johnson & Johnson and Walmart are implementing sustainable practices in their supply chains2 . Wal-Mart has partnered with Patagonia for developing eco-friendly products in order to turn her business ‘Green’ (Burke, 2010). It is also putting corporate social responsibility (CSR) efforts to make its business more socially responsible3 . Similarly, world’s largest retail chain of natural and organic foods Whole Foods Market (WFM) is putting effort in CSR while insisting on its suppliers for putting effort in greening (Ma X, 2017). In another example, the beverages giant PepsiCo announced 2025 Sustainability Agenda designed to focus on the environment, health, and social issues across her supply chain. PepsiCo mandates her suppliers to implement green technology to reduce the carbon footprint4 . In India many NGOs, trade organisations, and local population have accused PepsiCo of wasting groundwater, leading to its depletion. In order to address this concern of local stakeholders, PepsiCo has initiated several projects on water conservation and waste management under her CSR activities (Das, 2016). In this particular case, we observe that a firm allocates greening responsibilities to her upstream partners and she takes up the downstream responsibilities of CSR. Our problem is specifically motivated by above examples where an upstream firm (either a supplier or a manufacturer) undertakes greening effort while a downstream firm (either a buyer or a retailer) put efforts in CSR. Both players (supplier or buyer) may put these sustainable efforts simultaneously. However, the cases of suppliers undertaking greening effort and buyer putting CSR effort are more prevalent in practice (Ghosh and Shah, 2015, 2012; Ma P et al., 2017). We can intuitively understand that as most of the manufacturing activities are carried out by upstream firms, the supplier/manufacturer is more suited for exerting greening effort in order to reduce environmental impact of production. On the other hand, the downstream firms (buyer/retailer) are more likely to face the public directly. Therefore, the buyer tends to put more efforts on CSR to position herself as a socially responsible agent. Recent studies have indicated that green technology related investment is one of the major barriers in the implementation of sustainability (Esfahbodi et al., 2016; Jayaram and Avittathur, 2015). Moreover, manufacturing firms are only willing to adopt green technology or CSR activities if they enhance their profitability. This could be possible only if firms benefit from their sustainable image (Yang et al., 2017). Fortunately, customer awareness regarding sustainability has increased manifold in recent times and consumers are now willing to pay more for sustainable products. A recent survey conducted by Nielson5 across 60 countries reveals that 55% of the respondents are willing to pay a premium for products and services which are committed towards positive greening and social efforts.