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- Publisher Website: 10.1016/j.ejor.2020.06.008
- Scopus: eid_2-s2.0-85087220455
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Article: Supply contracting and process innovation in a dynamic supply chain with information asymmetry
Title | Supply contracting and process innovation in a dynamic supply chain with information asymmetry |
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Authors | |
Keywords | OR in research and development Supply chain Process innovation Wholesale contract Information asymmetry |
Issue Date | 2021 |
Publisher | Elsevier BV. The Journal's web site is located at http://www.elsevier.com/locate/ejor |
Citation | European Journal of Operational Research, 2021, v. 288 n. 2, p. 552-562 How to Cite? |
Abstract | We investigate the process innovation and contracting decisions of a dynamic supply chain consisting of a supplier and a manufacturer, with the manufacturer possessing private information about her efficiency of process innovation. To overcome the potential adverse selection problem due to the asymmetric information, the supplier designs a menu of supply contracts that stipulates both the wholesale price and the purchasing quantity. We find that under information asymmetry, the supplier will optimally set a higher wholesale price but a lower purchasing quantity for the manufacturer with high innovation efficiency than that for the manufacturer with low innovation efficiency. As a consequence, the manufacturer with high innovation efficiency will significantly underinvest in innovation due to information asymmetry in addition to the impact of the double marginalization effect. Moreover, although a longer contract period tends to better motivate innovation, it can also magnify the influences of adverse selection on supply chain contracting, leading to a higher wholesale price for the manufacturer with high innovation efficiency. |
Persistent Identifier | http://hdl.handle.net/10722/286216 |
ISSN | 2023 Impact Factor: 6.0 2023 SCImago Journal Rankings: 2.321 |
ISI Accession Number ID |
DC Field | Value | Language |
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dc.contributor.author | NI, J | - |
dc.contributor.author | ZHAO, J | - |
dc.contributor.author | Chu, LK | - |
dc.date.accessioned | 2020-08-31T07:00:47Z | - |
dc.date.available | 2020-08-31T07:00:47Z | - |
dc.date.issued | 2021 | - |
dc.identifier.citation | European Journal of Operational Research, 2021, v. 288 n. 2, p. 552-562 | - |
dc.identifier.issn | 0377-2217 | - |
dc.identifier.uri | http://hdl.handle.net/10722/286216 | - |
dc.description.abstract | We investigate the process innovation and contracting decisions of a dynamic supply chain consisting of a supplier and a manufacturer, with the manufacturer possessing private information about her efficiency of process innovation. To overcome the potential adverse selection problem due to the asymmetric information, the supplier designs a menu of supply contracts that stipulates both the wholesale price and the purchasing quantity. We find that under information asymmetry, the supplier will optimally set a higher wholesale price but a lower purchasing quantity for the manufacturer with high innovation efficiency than that for the manufacturer with low innovation efficiency. As a consequence, the manufacturer with high innovation efficiency will significantly underinvest in innovation due to information asymmetry in addition to the impact of the double marginalization effect. Moreover, although a longer contract period tends to better motivate innovation, it can also magnify the influences of adverse selection on supply chain contracting, leading to a higher wholesale price for the manufacturer with high innovation efficiency. | - |
dc.language | eng | - |
dc.publisher | Elsevier BV. The Journal's web site is located at http://www.elsevier.com/locate/ejor | - |
dc.relation.ispartof | European Journal of Operational Research | - |
dc.subject | OR in research and development | - |
dc.subject | Supply chain | - |
dc.subject | Process innovation | - |
dc.subject | Wholesale contract | - |
dc.subject | Information asymmetry | - |
dc.title | Supply contracting and process innovation in a dynamic supply chain with information asymmetry | - |
dc.type | Article | - |
dc.identifier.email | Chu, LK: lkchu@hku.hk | - |
dc.identifier.authority | Chu, LK=rp00113 | - |
dc.description.nature | link_to_subscribed_fulltext | - |
dc.identifier.doi | 10.1016/j.ejor.2020.06.008 | - |
dc.identifier.scopus | eid_2-s2.0-85087220455 | - |
dc.identifier.hkuros | 313641 | - |
dc.identifier.volume | 288 | - |
dc.identifier.issue | 2 | - |
dc.identifier.spage | 552 | - |
dc.identifier.epage | 562 | - |
dc.identifier.isi | WOS:000571182500014 | - |
dc.publisher.place | Netherlands | - |
dc.identifier.issnl | 0377-2217 | - |