The dynamic risk profiles and management strategies in supply chain coopetition under altruistic preference

Abstract

This paper focuses on bilateral coopetition within a two-echelon supply chain consisting of manufacturer and retailer. The objective is to establish a comprehensive stochastic dynamical framework for investigating the dynamic mechanisms of supply chain coopetition (SCC) and to develop a novel method for optimal decision-making of ownership incentive and capital structure under the measurement of dynamic risks in uncertain environment. The study introduces the altruistic preference to characterize the bilateral utility, and establish a stochastic system model within the framework of Langevin dynamics. Considering the inherent uncertainty in SCC, we define and classify the dynamic risks into bilateral cooperation risk and system response risk, based on which we propose a novel indicator to assess the performance in terms of risks. In the simulations, we consider the different scenarios to discuss the influences of various factors, i.e., ownership ratio, capital leverage, altruistic preference, and uncertain environment, on dynamic risk profiles and the performance in SCC, and explore the feasibility of constructing strategies from these dimensions. The results provide valuable insights for risk management and decision-making within the supply chain context.