Quality Improvement Decisions in Service Supply Chains with Collaborative and Free-Riding Behaviors

Abstract

The dominant position of a member within a service supply chain plays a crucial role in fostering a willingness to improve service quality. Consequently, this study examines a service supply chain comprising a supplier and an integrator, aiming to investigate the influence of four different power structures, namely, supplier-led, integrator-led, supplier–integrator power balance, and supplier–integrator centralized decision, on the decision-making process for service quality improvement by members. The findings highlight that the optimal willingness to improve service quality in a service supply chain is not necessarily infinitely close to 100%, and is influenced by factors such as revenue share, cost, effect, and dominant position. In cases where the collaborative improvement effect is weak, even the dominant member may display a limited willingness, rendering centralized decision-making meaningless. If the collaborative improvement effect surpasses the combined independent improvement effects, the dominant position can help strengthen willingness, although it may not always result in higher profits. Conversely, a power-balanced scenario can be advantageous in achieving the highest profit for the entire supply chain.