Buyer direct financing with blockchain-assisted due diligence in supply chain

【Author】 Cao, Yifan; Shen, Bin; Chan, Hau-Ling

【Source】INTERNATIONAL TRANSACTIONS IN OPERATIONAL RESEARCH

【影响因子】3.610

【Abstract】Capital constraints are one of the major challenges for the supplier to invest in activities to enhance environmental and social responsibility (ESR) in production. Responsible buyer direct financing has emerged as an important solution to motivate supplier ESR by pegging the interest rate to the supplier's ESR level. Motivated by real practices, we develop game-theoretical models to explore the value of conducting blockchain-assisted due diligence to inspect the borrowing supplier's ESR qualification in a two-tier supply chain structure where the downstream buyer directly finances the capital-constrained supplier. Conventional wisdom tells us that driving greater supplier transparency (e.g., conducting blockchain-assisted due diligence) will motivate the supplier to strengthen environmental and social compliance. However, we identify the necessary and sufficient "backfiring condition" under which the blockchain-assisted due diligence may "backfire" by reducing the supplier's ESR efforts. The supplier devotes more ESR efforts if and only if the due diligence cost is sufficiently high. Our result implies that the heavy cost of adopting blockchain technology is not necessarily bad from the responsibility perspective as long as the backfiring condition does not hold. Moreover, we identify the Pareto zone in which conducting blockchain-assisted due diligence could benefit both supply chain members. We extend our model by examining the impact of a shift from profit orientation to social welfare orientation. Our findings provide managerial insights into the implementation of blockchain-assisted due diligence to enhance supplier ESR and improve supply chain members' profits. [Cao, Yifan; Shen, Bin] Donghua Univ, Glorious Sun Sch Business & Management, Shanghai, Peoples R China; [Chan, Hau-Ling] Hong Kong Polytech Univ, Dept Logist & Maritime Studies, Hung Hom, Hong Kong, Peoples R China Donghua University; Hong Kong Polytechnic University Shen, B (通讯作者)，Donghua Univ, Glorious Sun Sch Business & Management, Shanghai, Peoples R China. paula.caoyf@gmail.com; binshen@dhu.edu.cn; hauling.chan@polyu.edu.hk Cao, Yifan/0000-0002-8858-1609 National Science Foundation of China [72271050, 71832001] National Science Foundation of China(National Natural Science Foundation of China (NSFC)) Acknowledgments We thank the editor-in-chief, associate editor, and three reviewers for their constructive comments and helpful suggestions on improving this paper. This paper is partially supported by National Science Foundation of China (Grant Numbers: 72271050, 71832001). 42 0 0 0 0 WILEY HOBOKEN 111 RIVER ST, HOBOKEN 07030-5774, NJ USA 0969-6016 1475-3995 INT T OPER RES Int. Trans. Oper. Res. 2023 JUN 9 2023 10.1111/itor.13334 http://dx.doi.org/10.1111/itor.13334 JUN 2023 28 Management; Operations Research & Management Science Science Citation Index Expanded (SCI-EXPANDED); Social Science Citation Index (SSCI) Business & Economics; Operations Research & Management Science I5RI4 2023-06-24 WOS:001003347400001

【Keywords】buyer direct finance; capital-constrained supplier; blockchain; due diligence; supply chain management

【发表时间】2023 2023 JUN 9

【收录时间】2023-06-28

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