International Sustainable Supply Chain Management Under Bilateral Governments’ Policy Intervention and Power Asymmetry

Abstract

This article aims to address the issue of international sustainable supply chain management under bilateral governments’ policy intervention. The dynamic and stochastic features of bilateral governments’ policy, focusing on collaboration and power asymmetry, are analytically considered. Specifically, various cross-governmental interaction factors, such as green investment efforts, interaction externalities, and political power asymmetry, are characterized and examined in the proposed theoretical model. Accordingly, a multimethodological approach using a two-stage game-theoretic analytical model is developed, where the decision dynamics of cross-governmental cooperation are investigated at the first stage, and its influence on sustainable supply chain management (in both countries) is explored at the second stage. Anecdotal evidence and applicability of the proposed model are illustrated via an empirical study using multiple-data sources. We show that governmental decisions for bilateral cooperation are significantly related to the bilateral interaction factors such as green investment efforts and less likely to be affected by the power asymmetry in the long run. Furthermore, we find that cooperative bilateral policy intervention favors not only the enhancement of bilateral social welfare (the government level) but also the sustainability of international supply chains (the firm level).