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Proportional incentive contracts in live streaming commerce supply chain based on target sales volume

Author

Listed:
  • Yanfen Zhang

    (Donghua University)

  • Qi Xu

    (Donghua University)

Abstract

It is critical to investigate new contract cooperation mode to deepen the cooperative relationship between brand suppliers and streamers as the live streaming commerce industry is gradually approaching standardization. In this paper, we discuss the proportional incentive contract based on target sales volume and study contract design optimization based on principal-agent theory in the context of the live streaming commerce supply chain. Then we compare the incentive effect of the proportional incentive contract and the linear contract on the streamer’s sales effort. The results show that the optimal solutions of the proportional incentive contract exist under certain conditions and are the first-best solutions. In contrast, the linear contract cannot achieve the first-best solution. When the proportional threshold is less than a certain fixed value, the existence of the optimal proportional incentive contract can always be guaranteed, and there are multiple pairs of contract menus to make the contract reach the optimal state. Furthermore, while the fixed service fee and the commission rate in the proportional incentive contract both have an incentive effect on the streamer, only the commission rate does so in the linear contract. As a result, the proportional incentive contract can help the live streaming commerce supply chain system to achieve higher performance than the linear contract.

Suggested Citation

  • Yanfen Zhang & Qi Xu, 2025. "Proportional incentive contracts in live streaming commerce supply chain based on target sales volume," Electronic Commerce Research, Springer, vol. 25(1), pages 241-269, February.
    • Handle: RePEc:spr:elcore:v:25:y:2025:i:1:d:10.1007_s10660-023-09684-7
    DOI: 10.1007/s10660-023-09684-7
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