Abstract
With the increase of public environmental awareness and the growth of e-commerce, sustainable development promotes the manufacturer to increasingly participate in green innovation and make full use of the online sales channel to enhance competitiveness. Despite decentralized encroachment being widely adopted in business reality, the current literature has commonly paid more attention to centralized encroachment. To complement related research, a dual-channel green supply chain composed of a manufacturer (its retail subsidiary) and a retailer is investigated. We focus on what encroachment strategy (centralization vs. decentralization) drives the green innovation and analyze the impact of consumer green awareness and product substitutability on the manufacturer’s encroachment strategy, green innovation efforts and supply chain performance. Under each encroachment strategy, we build a Stackelberg game model and derive the equilibrium outcome. Then, we theoretically analyze the effects of consumer green awareness and product substitutability on green innovation and each party’s profitability. Our comparative analysis shows what encroachment strategy drives green innovation and what encroachment strategy benefits both parties and social welfare. Numerical studies are also conducted to support the analytical results. Our key findings reveal that decentralization improves the green innovation and achieves a both-win situation for the manufacturer and the retailer. Besides that, decentralization can reduce the environmental damage and increase social welfare as well.
Highlights
In recent years, environmental damage and deterioration issues, such as air and water pollution, greenhouse effect, climate change, landfill waste, acidic rains and noise pollution, have been widely concerned by lots of the countries in the world
The government in China plans for a 40–45% reduction in its carbon emissions per-unit GDP by 2025 compared to its 2005 level [1]
The primary goal of this paper is to study what encroachment strategy drives the green innovation and analyze the impact of consumer green awareness and product substitutability on the manufacturer’s encroachment strategy, green innovation efforts and supply chain performance
Summary
Environmental damage and deterioration issues, such as air and water pollution, greenhouse effect, climate change, landfill waste, acidic rains and noise pollution, have been widely concerned by lots of the countries in the world. These environmental hazards are increasingly threatening human health and survival. To address these environmental issues, both governments and firms all over the world have taken action. The government in China plans for a 40–45% reduction in its carbon emissions per-unit GDP by 2025 compared to its 2005 level [1]. Many famous firms including Wal-Mart, M&S, Tesco and Debenhams take various measures to reduce their own and suppliers’ carbon footprint in raw material sourcing, production, logistics and retailing [2]
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