Environmental responsibility decisions of a supply chain under different channel leaderships

Abstract

Increasing concerns on environmental issues urge supply chain to be more sustainable. Channel leadership has a close relationship with the development of a sustainable supply chain. This paper employs game models of a sustainable supply chain, considering environmental responsibilities under different channel leaderships. We study how green-level, environmental responsibility, and performance are influenced by channel leaderships and environmental responsibility behavior. Analytical results indicate that if the manufacturer or the retailer are the leader of the channel, they might tend to lower environmental responsibility decisions. The retailer always wants to be the leader. But the manufacturer does not always want to be the leader of the channel, which also depends on consumer green-level sensitivity. Further, the impact of raw-material cost is negative for the manufacturer but positive for the retailer. Differently, the effect of environmental responsibility cost sensitivity on the manufacturer and the retailer are dependent on channel leadership. Besides, the manufacturer environmental responsibility behavior significantly affects green-level decisions, further offsets the manufacturer’s first-mover disadvantage when consumer sensitivity is relatively small. • We consider an environmental responsible supply chain with different channel leaderships. • We study the impact of channel leadership on the optimal decisions and performance of the supply chain. • The retailer has the first-mover advantage; the manufacturer might have the first-mover disadvantage sometimes. • Raw-material cost of the green product has a negative impact on the manufacturer but a positive impact on the retailer. • Environmental responsibility behavior alters manufacturer’s first-mover disadvantage when consumer sensitivity is low.