IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v13y2021i3p1357-d488527.html
   My bibliography  Save this article

Optimal Financing Strategy in a Capital-Constrained Supply Chain with Retailer Green Marketing Efforts

Author

Listed:
  • Xiaoli Zhang

    (School of Economics and Management, Harbin University of Science and Technology, Harbin 150080, China
    Department of Accounting, Harbin Finance University, Harbin 150030, China)

  • Guoyi Xiu

    (School of Economics and Management, Harbin University of Science and Technology, Harbin 150080, China)

  • Fakhar Shahzad

    (School of Management, Jiangsu University, Zhenjiang 212013, China)

  • Yupeng Duan

    (Department of Statistics and Applied Probability, University of California, Santa Barbara, CA 93106, USA)

Abstract

The purpose of this research is to examine the green supply chain (GSC) financing decisions of manufacturers and capital-constrained retailers in order to establish a Stackelberg game model under decentralized and centralized decision-making. This paper studies the influence of retailers’ choice of trade credit or bank loan financing strategy on a GSC’s performance and analyzes their decision-making tendency. The results show that manufacturers should provide trade credit and participate in retailers’ financing decisions to avoid double marginal effects under both centralized and decentralized decision-making. Interestingly, the optimal value of green marketing effort and retailer order quantity was twice as high as the decentralized under the centralized decision, indicating that the centralized decision could better improve GSC’s financing efficiency. Especially when the trade credit financing strategy is feasible, this effect is more significant. Finally, the outcomes are verified through numerical simulation, which references GSC practitioners in management decisions.

Suggested Citation

  • Xiaoli Zhang & Guoyi Xiu & Fakhar Shahzad & Yupeng Duan, 2021. "Optimal Financing Strategy in a Capital-Constrained Supply Chain with Retailer Green Marketing Efforts," Sustainability, MDPI, vol. 13(3), pages 1-19, January.
    • Handle: RePEc:gam:jsusta:v:13:y:2021:i:3:p:1357-:d:488527
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/13/3/1357/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/13/3/1357/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Zhu, Wenge & He, Yuanjie, 2017. "Green product design in supply chains under competition," European Journal of Operational Research, Elsevier, vol. 258(1), pages 165-180.
    2. Bai, Yan & Zhang, Jing, 2012. "Financial integration and international risk sharing," Journal of International Economics, Elsevier, vol. 86(1), pages 17-32.
    3. Phan, Dinh Anh & Vo, Thi Le Hoa & Lai, Anh Ngoc & Nguyen, Thi Lan Anh, 2019. "Coordinating contracts for VMI systems under manufacturer-CSR and retailer-marketing efforts," International Journal of Production Economics, Elsevier, vol. 211(C), pages 98-118.
    4. Yenipazarli, A. & Vakharia, A., 2015. "Pricing, market coverage and capacity: Can green and brown products co-exist?," European Journal of Operational Research, Elsevier, vol. 242(1), pages 304-315.
    5. Seifert, Daniel & Seifert, Ralf W. & Protopappa-Sieke, Margarita, 2013. "A review of trade credit literature: Opportunities for research in operations," European Journal of Operational Research, Elsevier, vol. 231(2), pages 245-256.
    6. Chipo Mukonza & Ilze Swarts, 2020. "The influence of green marketing strategies on business performance and corporate image in the retail sector," Business Strategy and the Environment, Wiley Blackwell, vol. 29(3), pages 838-845, March.
    7. Chou, Sheng-Fang & Horng, Jeou-Shyan & Sam Liu, Chih-Hsing & Lin, Jun-You, 2020. "Identifying the critical factors of customer behavior: An integration perspective of marketing strategy and components of attitudes," Journal of Retailing and Consumer Services, Elsevier, vol. 55(C).
    8. Ghosh, Debabrata & Shah, Janat, 2015. "Supply chain analysis under green sensitive consumer demand and cost sharing contract," International Journal of Production Economics, Elsevier, vol. 164(C), pages 319-329.
    9. Shaobo Wu & Xun Yao & Guangdong Wu, 2020. "Environmental Investment Decision of Green Supply Chain considering the Green Uncertainty," Complexity, Hindawi, vol. 2020, pages 1-13, November.
    10. Zhu, Qingyun & Sarkis, Joseph, 2016. "Green marketing and consumerism as social change in China: Analyzing the literature," International Journal of Production Economics, Elsevier, vol. 181(PB), pages 289-302.
    11. Chen, Xiangfeng, 2015. "A model of trade credit in a capital-constrained distribution channel," International Journal of Production Economics, Elsevier, vol. 159(C), pages 347-357.
    12. Huang, Yung-Fu, 2007. "Economic order quantity under conditionally permissible delay in payments," European Journal of Operational Research, Elsevier, vol. 176(2), pages 911-924, January.
    13. Polonsky, Michael Jay, 2011. "Transformative green marketing: Impediments and opportunities," Journal of Business Research, Elsevier, vol. 64(12), pages 1311-1319.
    14. Hong, Zhaofu & Guo, Xiaolong, 2019. "Green product supply chain contracts considering environmental responsibilities," Omega, Elsevier, vol. 83(C), pages 155-166.
    15. Shan Chang & Bin Hu & Xiuhong He, 2019. "Supply Chain Coordination in the Context of Green Marketing Efforts and Capacity Expansion," Sustainability, MDPI, vol. 11(20), pages 1-22, October.
    16. Hengjie Xu & Qiang Mei & Fakhar Shahzad & Suxia Liu & Xingle Long & Jingjing Zhang, 2020. "Untangling the Impact of Green Finance on the Enterprise Green Performance: A Meta-Analytic Approach," Sustainability, MDPI, vol. 12(21), pages 1-16, October.
    17. Cao, Erbao & Yu, Man, 2019. "The bright side of carbon emission permits on supply chain financing and performance," Omega, Elsevier, vol. 88(C), pages 24-39.
    18. Dash Wu, Desheng & Yang, Lipo & Olson, David L., 2019. "Green supply chain management under capital constraint," International Journal of Production Economics, Elsevier, vol. 215(C), pages 3-10.
    19. Evangelia Sdrolia & Grigoris Zarotiadis, 2019. "A Comprehensive Review For Green Product Term: From Definition To Evaluation," Journal of Economic Surveys, Wiley Blackwell, vol. 33(1), pages 150-178, February.
    20. Yan, Nina & Sun, Baowen & Zhang, Hui & Liu, Chongqing, 2016. "A partial credit guarantee contract in a capital-constrained supply chain: Financing equilibrium and coordinating strategy," International Journal of Production Economics, Elsevier, vol. 173(C), pages 122-133.
    21. R. Canan Savaskan & Shantanu Bhattacharya & Luk N. Van Wassenhove, 2004. "Closed-Loop Supply Chain Models with Product Remanufacturing," Management Science, INFORMS, vol. 50(2), pages 239-252, February.
    22. Lee, Chang Hwan & Rhee, Byong-Duk, 2011. "Trade credit for supply chain coordination," European Journal of Operational Research, Elsevier, vol. 214(1), pages 136-146, October.
    23. Hwan Lee, Chang & Rhee, Byong-Duk, 2010. "Coordination contracts in the presence of positive inventory financing costs," International Journal of Production Economics, Elsevier, vol. 124(2), pages 331-339, April.
    24. Panos Kouvelis & Wenhui Zhao, 2012. "Financing the Newsvendor: Supplier vs. Bank, and the Structure of Optimal Trade Credit Contracts," Operations Research, INFORMS, vol. 60(3), pages 566-580, June.
    25. Massimiliano Ferrara & Mehrnoosh Khademi & Mehdi Salimi & Somayeh Sharifi, 2017. "A Dynamic Stackelberg Game of Supply Chain for a Corporate Social Responsibility," Discrete Dynamics in Nature and Society, Hindawi, vol. 2017, pages 1-8, February.
    26. YuHang Zhang & Ying Wang, 2019. "Supply Chain Decisions Considering Heterogeneous Consumer Greenness Preference and Reservation Utilities," International Journal of Information Systems and Supply Chain Management (IJISSCM), IGI Global, vol. 12(1), pages 1-21, January.
    27. John A. Buzacott & Rachel Q. Zhang, 2004. "Inventory Management with Asset-Based Financing," Management Science, INFORMS, vol. 50(9), pages 1274-1292, September.
    28. Lampe, Marc & Gazda, Gregory M., 1995. "Green marketing in Europe and the United States: An evolving business and society interface," International Business Review, Elsevier, vol. 4(3), pages 295-312, September.
    29. Xiuli Chao & Jia Chen & Shouyang Wang, 2008. "Dynamic inventory management with cash flow constraints," Naval Research Logistics (NRL), John Wiley & Sons, vol. 55(8), pages 758-768, December.
    30. Du, Ruo & Banerjee, Avijit & Kim, Seung-Lae, 2013. "Coordination of two-echelon supply chains using wholesale price discount and credit option," International Journal of Production Economics, Elsevier, vol. 143(2), pages 327-334.
    31. Sana, Shib Sankar, 2020. "Price competition between green and non green products under corporate social responsible firm," Journal of Retailing and Consumer Services, Elsevier, vol. 55(C).
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Xiaoli Zhang & Guoyi Xiu & Fakhar Shahzad & Caiquan Duan, 2021. "The Impact of Equity Financing on the Performance of Capital-Constrained Supply Chain under Consumers’ Low-Carbon Preference," IJERPH, MDPI, vol. 18(5), pages 1-22, February.
    2. Qin, Juanjuan & Fu, Huiping & Wang, Ziping & Xia, Liangjie, 2021. "Financing and carbon emission reduction strategies of capital-constrained manufacturers in E-commerce supply chains," International Journal of Production Economics, Elsevier, vol. 241(C).
    3. Wen-Bin Wang & Qiang Sun & Xiu-Xia Yan & Yuan-Qing Liu, 2022. "Dual-Channel Supply Chain Financing Operation Strategy Considering Free-Riding Effect under Different Power Structures," Sustainability, MDPI, vol. 14(15), pages 1-27, July.
    4. Chun-Yi Ho & Bi-Huei Tsai & Chiao-Shan Chen & Ming-Tsang Lu, 2021. "Exploring Green Marketing Orientations toward Sustainability the Hospitality Industry in the COVID-19 Pandemic," Sustainability, MDPI, vol. 13(8), pages 1-18, April.
    5. Issam A. R. Moghrabi & Sameer Ahmad Bhat & Piotr Szczuko & Rawan A. AlKhaled & Muneer Ahmad Dar, 2023. "Digital Transformation and Its Influence on Sustainable Manufacturing and Business Practices," Sustainability, MDPI, vol. 15(4), pages 1-35, February.
    6. Peng, Yongtao & Wang, Wei & Li, Shuanglin & Veglianti, Eleonora, 2022. "Competition and cooperation in the dual-channel green supply chain with customer satisfaction," Economic Analysis and Policy, Elsevier, vol. 76(C), pages 95-113.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Xu, Xinhan & Chen, Xiangfeng & Jia, Fu & Brown, Steve & Gong, Yu & Xu, Yifan, 2018. "Supply chain finance: A systematic literature review and bibliometric analysis," International Journal of Production Economics, Elsevier, vol. 204(C), pages 160-173.
    2. Xiaoli Zhang & Guoyi Xiu & Fakhar Shahzad & Caiquan Duan, 2021. "The Impact of Equity Financing on the Performance of Capital-Constrained Supply Chain under Consumers’ Low-Carbon Preference," IJERPH, MDPI, vol. 18(5), pages 1-22, February.
    3. Yang, Honglin & Zhuo, Wenyan & Shao, Lusheng, 2017. "Equilibrium evolution in a two-echelon supply chain with financially constrained retailers: The impact of equity financing," International Journal of Production Economics, Elsevier, vol. 185(C), pages 139-149.
    4. Lai, Zhixuan & Lou, Gaoxiang & Ma, Haicheng & Chung, Sai-Ho & Wen, Xin & Fan, Tijun, 2022. "Optimal green supply chain financing strategy: Internal collaborative financing and external investments," International Journal of Production Economics, Elsevier, vol. 253(C).
    5. Wang, Chengfu & Fan, Xiaojun & Yin, Zhe, 2019. "Financing online retailers: Bank vs. electronic business platform, equilibrium, and coordinating strategy," European Journal of Operational Research, Elsevier, vol. 276(1), pages 343-356.
    6. Shi, Jinzhao & Guo, Ju'e & Du, Qiang & Lin, Feng & Lai, Kin Keung & Cheng, T.C.E., 2020. "Optimal financing mode selection for a capital-constrained retailer under an implicit bankruptcy cost," International Journal of Production Economics, Elsevier, vol. 228(C).
    7. Jiao Wang & Lima Zhao & Arnd Huchzermeier, 2021. "Operations‐Finance Interface in Risk Management: Research Evolution and Opportunities," Production and Operations Management, Production and Operations Management Society, vol. 30(2), pages 355-389, February.
    8. Avinadav, Tal & Levy, Priel, 2023. "The effect of an uncertain commission rate on the decisions of a capital-constrained developer," Operations Research Perspectives, Elsevier, vol. 11(C).
    9. Liming Zhao & Ling Li & Yao Song & Cong Li & Yujie Wu, 2018. "Research on Pricing and Coordination Strategy of a Sustainable Green Supply Chain with a Capital-Constrained Retailer," Complexity, Hindawi, vol. 2018, pages 1-12, January.
    10. Phan, Dinh Anh & Hovelaque, Vincent & Viviani, Jean-Laurent, 2023. "Integrating point-of-sale financing into the coordination of a price and credit dependent e-commerce supply chain," International Journal of Production Economics, Elsevier, vol. 259(C).
    11. Huang, Shuai & Fan, Zhi-Ping & Wang, Ningning, 2020. "Green subsidy modes and pricing strategy in a capital-constrained supply chain," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 136(C).
    12. Jin, Wei & Ding, Wen & Yang, Jun, 2022. "Impact of financial incentives on green manufacturing: Loan guarantee vs. interest subsidy," European Journal of Operational Research, Elsevier, vol. 300(3), pages 1067-1080.
    13. Shi, Jinzhao & Liu, Dian & Du, Qiang & Cheng, T.C.E., 2023. "The role of the procurement commitment contract in a low-carbon supply chain with a capital-constrained supplier," International Journal of Production Economics, Elsevier, vol. 255(C).
    14. Wang, Chengfu & Chen, Xiangfeng & Jin, Wei & Fan, Xiaojun, 2022. "Credit guarantee types for financing retailers through online peer-to-peer lending: Equilibrium and coordinating strategy," European Journal of Operational Research, Elsevier, vol. 297(1), pages 380-392.
    15. Jinpyo Lee, 2019. "Impact of Loss-Aversion on a Financially-Constrained Supply Chain," Sustainability, MDPI, vol. 11(9), pages 1-19, May.
    16. Yan, Nina & Sun, Baowen & Zhang, Hui & Liu, Chongqing, 2016. "A partial credit guarantee contract in a capital-constrained supply chain: Financing equilibrium and coordinating strategy," International Journal of Production Economics, Elsevier, vol. 173(C), pages 122-133.
    17. Jin, Wei & Zhang, Qinhong & Luo, Jianwen, 2019. "Non-collaborative and collaborative financing in a bilateral supply chain with capital constraints," Omega, Elsevier, vol. 88(C), pages 210-222.
    18. Li Cui & Siwei Guo & Hao Zhang, 2020. "Coordinating a Green Agri-Food Supply Chain with Revenue-Sharing Contracts Considering Retailers’ Green Marketing Efforts," Sustainability, MDPI, vol. 12(4), pages 1-16, February.
    19. Huang, Jing & Yang, Wensheng & Tu, Yiliu, 2020. "Financing mode decision in a supply chain with financial constraint," International Journal of Production Economics, Elsevier, vol. 220(C).
    20. Priya, Bhawna & Biswas, Indranil & Agrawal, Anupam, 2023. "The over-ordering problem in trade credit: Role of return policies," European Journal of Operational Research, Elsevier, vol. 309(2), pages 731-744.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:13:y:2021:i:3:p:1357-:d:488527. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.