Optimizing the competitive sustainable process and pricing decision of digital supply chain: A power-balance perspective

Abstract

In recent years, sustainability and digitalization issues have emerged in supply chain management (SCM), attracting attention from academics and businesses. Furthermore, digital servitization changes value creation processes and subsequently influences supply chain relationships and power structures. Further, the success of digital supply chains (DSC) is closely related to the corporate social responsibility (CSR) practiced by the competing channels due to the resulting competitive environment. This study explores the optimality of competitive sustainability service, digitalization service, and pricing decisions under Manufacturer Stackelberg (MS) game setting, Retailer Stackelberg (RS) game setting, Vertical Nash (VN), and integrated system (IS) model; therefore, it contributes to the literature on DSC systems which often focuses on optimizing price-only. In addition, it examines the environmental and economic benefits of taking advantage of green innovation products and digitalization processes. Results of implementing the model showed that when manufacturers combine digitalization, sustainability, and CSR activities, supply chain profits increase in all four power balance structures. However, the Model IS is sophisticated enough to synchronize the economic, environmental, and social gains of the system, leading to significant improvements in the performance indices. Furthermore, it is observed that the total DSC profit under the VN model is the highest. Whereas, manufacturers generate higher profits with Model MS, and retailers generate higher profits with Models RS and VN. Finally, we provide managers with guidance regarding the establishment of green innovation offerings by understanding the industrial organization's progress toward digitalization.