Highlights How buyer motivates supplier participation in digital transformation is studied. Monetary contract and hybrid contract are compared. Monetary contract has an inhibitory effect. Hybrid contract enhances supplier participation. Improved hybrid contract can attain a win–win result for both supply chain members.
Abstract By employing four game models, this paper examines the impact of both monetary and symbolic incentives on supplier participation in digital transformation of a two-echelon supply chain. We find that in the presence of monetary incentives, the supplier may exhibit free riding behavior when the buyer’s cost-sharing is sufficiently high, thereby leaving the buyer with no incentive to motivate the supplier. In contrast, a hybrid contract combining monetary with symbolic incentives enhances supplier participation. As the hybrid incentive is not always effective, we propose an improved hybrid contract with a reward-punishment mechanism to better motivate the supplier. Analytical results reveal that both members enjoy higher profitability when the buyer’s reward and punishment scheme is set within a reasonable range.
Supplier participation in digital transformation of a two-echelon supply chain: Monetary and symbolic incentives
2022-03-24
Article (Journal)
Electronic Resource
English
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