Reframing supply chain finance in an era of reglobalization: On the value of multi-sided crowdfunding platforms

Abstract

This paper investigates the moderating role of a host government that promotes a multi-sided platform (MSP) as an alternative supply chain finance (SCF) solution. The MSP comprises equity crowdfunding, fixed-income funds, and low-rate lending facilities. We examine the sequential interactions between the host government (as the dominant legislator), a crowd of risk-averse small investors, and two competing SCs (local and foreign) that are engaged in Cournot competition. The players’ equilibrium strategies are characterized under two platform power structures, namely small investors-led and SC-led. The joint impact of government legislation and platform’s configuration on the performance of the proposed SCF mechanism is investigated. Results reveal that, while the regulated MSP outperforms a deregulated scenario, the profit-seeking behavior of the host government may intensify the power struggle between the local SC and small investors, and restrict the platform’s overall performance. To successfully practice smart protectionism, policy makers are urged to reframe existing SCF schemes by leveraging their moderating influence and prioritizing social welfare over their short-term economic goals. This not only abates the power imbalance in MSPs, but also enhances the players’ participation and enables host governments to further support their digital platform economy in the era of reglobalization.