Non-collaborative and collaborative financing in a bilateral supply chain with capital constraints

By W. Jin, Qinhong Zhang, Jianwen Luo. Omega, 2019

125 citations recorded by the source corpus.

Abstract We consider three kinds of financing strategies for a bilateral supply chain in which both the supplier and retailer are financially constrained. The three financing strategies are bank financing separately (BFS), bank financing with trade credit (BF-with-TC) and bank financing with the supplier's guarantee (BF-with-SG). The first one is regarded as a non-collaborative strategy, and the last two are regarded as collaborative strategies. By comparing the equilibrium decisions under the three financing strategies, we find that: (1) overall, collaborative strategies dominate non-collaborative strategy for the supplier and whole supply chain, whereas the reverse holds for the retailer; (2) BF-with-SG strategy performs the same as BFS strategy for all partners when the supplier provides no guarantee; (3) BF-with-SG strategy may outperform BF-with-TC strategy for the whole supply chain, depending on partners’ capital level as well as the supplier's guarantee ratio; (4) surprisingly, collaborative strategies do not necessarily result in less risk for the bank compared to non-collaborative strategy. Managerially, our results show that in some cases, all supply chain partners can perform better if the leader acts as a guarantor rather than as an intermediary creditor.

Subfields: Industrial and Manufacturing Engineering, Management Information Systems, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/5267475e2262556058c9bff450b9f839a2d88fa5