Highlights We study a firm’s sourcing and supplier financing strategies under competition. We analyze the impacts of operational and financial aspects on the sourcing strategy. Our study brings the financial element into the strategic sourcing literature. This study extends the financing supplier literature to a dual sourcing setting. We examine the value of buyer offered loan when there is alternative sourcing option.
Abstract This paper investigates a manufacturer’s strategic sourcing and supplier financing strategies under downstream horizontal competition and co-opetition. When the manufacturer and the rival engage in a simultaneous-move game, we show that the manufacturer should always exclusively source from and offer finance to a cost-advantageous supplier if the latter is severely capital-constrained. If the supplier is moderately capital-constrained, however, the manufacturer’s preferred sourcing strategy depends on the type of the backup supplier, which leads to a horizontal competition or co-opetition structure. We also examine the robustness of the results by studying the sequential-move game.
Sourcing under competition: The implications of supplier capital constraint and supply chain co-opetition
2021-01-31
Aufsatz (Zeitschrift)
Elektronische Ressource
Englisch
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