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Do fairness concerns matter for ESG decision-making? Strategic interactions in digital twin-enabled sustainable semiconductor supply chain

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  • Zhang, Mengdi
  • Yang, Wanting
  • Zhao, Zhiheng
  • Wang, Shuaian
  • Huang, George Q.

Abstract

Spatial-temporal visibility and traceability in the digital twin enable semiconductor supply chain great transparency and efficacy, but also poses challenges to information disclosure. There is growing evidence that investment in digital twin technology is becoming crucial for improving environmental, social, and governance (ESG) ratings and mitigating risks within a sustainable semiconductor supply chain. Nonetheless, how fairness concerns impact the decision-making processes among different stakeholders remains inadequately understood. This paper presents an analytical analysis of the dynamic strategic interplay among semiconductor manufacturers, consumers, and government regulatory agencies (GRAs) utilizing the evolutionary game model. The aim is to investigate how long-term ESG strategies and fairness-oriented behaviors respond to government incentives. The findings imply that substantial investment demands can dissuade semiconductor manufacturers from delivering ESG services, while low tax rates may lead to their complacency and a subsequent lack of investment in ESG initiatives. Meanwhile, semiconductor manufacturers are more inclined to provide ESG services when the order loss ratio is low, and the tax rate is high, with strict regulations further amplifying this probability. Furthermore, consumers valuing fairness and equity tend to give positive feedback for basic services but is critical of ESG services due to issues with transparency in digital twin technologies. Addressing these issues extends beyond the scope of market incentives alone, requiring interventions from third parties such as government regulations, policy incentives, and enhanced data security measures.

Suggested Citation

  • Zhang, Mengdi & Yang, Wanting & Zhao, Zhiheng & Wang, Shuaian & Huang, George Q., 2024. "Do fairness concerns matter for ESG decision-making? Strategic interactions in digital twin-enabled sustainable semiconductor supply chain," International Journal of Production Economics, Elsevier, vol. 276(C).
  • Handle: RePEc:eee:proeco:v:276:y:2024:i:c:s0925527324002275
    DOI: 10.1016/j.ijpe.2024.109370
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