Blockchain adoption for combating remanufacturing perceived risks in a reverse supply chain

Abstract

Remanufacturing provides excellent opportunities for socially responsible firms to achieve sustainable operations, benefiting manufacturers, consumers, and the environment. However, the market for remanufactured products faces challenges due to perceived risks, with consumers often expressing concerns about the quality and provenance of remanufactured parts. The advent of blockchain technology offers a promising solution for reverse supply chain players to manage these perceived risks. This study develops a game-theoretical model to investigate the incentives of reverse supply chain players to adopt blockchain technology to mitigate remanufacturing perceived risk. We examine consumer preferences for new and remanufactured products under different blockchain adoption strategies. Our findings indicate that choosing an appropriate blockchain adoption strategy can increase the remanufacturing rate. However, blockchain adoption does not necessarily expand market share. The optimal blockchain adoption strategy is determined by quality distrust and unit blockchain cost. When quality distrust is low and the unit blockchain cost is intermediate, investing in blockchain technology for new products can result in a triple-win outcome for the OEM, the recycler, and the environment. If quality distrust is high and the unit blockchain cost is not excessive, investing in blockchain technology for remanufactured products can also lead to a triple-win outcome. However, when both factors are low, no blockchain adoption strategy benefits the recycler or the environment, and there is a risk of the OEM overinvesting. We further investigate the effects of heterogeneous blockchain adoption costs, government regulations, and endogenized pricing by a third party on triple-win regions. This study offers valuable insights for reverse supply chain players on how to leverage emerging technologies to address remanufacturing perceived risk.