IDEAS home Printed from https://ideas.repec.org/a/oup/ijlctc/v17y2022ip980-990..html
   My bibliography  Save this article

Quality level and outsourcing strategies in a three-tier low-carbon supply chain
[Delegation vs. control in low-carbon supply chain procurement under competition]

Author

Listed:
  • Xinjian Wu
  • Chao Yu
  • Suyong Zhang

Abstract

We analyze the quality risk and outsourcing strategies in a three-tier low-carbon supply chain comprising an original equipment manufacturer (OEM), a contract manufacturer (CM) and a supplier under two competitive scenarios. The following two outsourcing strategies that are currently implemented by OEM are considered: consignment and turnkey. Under the consignment strategy, the OEM procures the components from the supplier and then outsources the product manufacturing to the CM. Under the turnkey strategy, the OEM outsources the component procurement and product manufacturing to the CM and CM procures the components from the supplier. We compare the quality level and two outsourcing strategies under non-competitive scenario in which the CM does not have its own brand products and competitive scenario in which the CM sells its own brand production. It is shown that, in the non-competitive scenario, OEM prefers the turnkey strategy than the consignment strategy in the low-carbon supply chain. In the competitive scenario, the OEM’s outsourcing strategy depends on the CM’s quality investment cost coefficient.

Suggested Citation

  • Xinjian Wu & Chao Yu & Suyong Zhang, 2022. "Quality level and outsourcing strategies in a three-tier low-carbon supply chain [Delegation vs. control in low-carbon supply chain procurement under competition]," International Journal of Low-Carbon Technologies, Oxford University Press, vol. 17, pages 980-990.
    • Handle: RePEc:oup:ijlctc:v:17:y:2022:i::p:980-990.
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1093/ijlct/ctac076
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Dilip Mookherjee, 2006. "Decentralization, Hierarchies, and Incentives: A Mechanism Design Perspective," Journal of Economic Literature, American Economic Association, vol. 44(2), pages 367-390, June.
    2. Guo, Pengfei & Song, Jing-Sheng & Wang, Yulan, 2010. "Outsourcing structures and information flow in a three-tier supply chain," International Journal of Production Economics, Elsevier, vol. 128(1), pages 175-187, November.
    3. Murat Kaya & Özalp Özer, 2009. "Quality risk in outsourcing: Noncontractible product quality and private quality cost information," Naval Research Logistics (NRL), John Wiley & Sons, vol. 56(7), pages 669-685, October.
    4. David P. Baron & David Besanko, 1992. "Information, Control, and Organizational Structure," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 1(2), pages 237-275, June.
    5. Fei Lv, 2019. "Should competing original equipment manufacturers outsource procurement activities under asymmetric cost information?," International Journal of Production Research, Taylor & Francis Journals, vol. 57(14), pages 4561-4578, July.
    6. Hongbin Cai & Walter Cont, 2004. "Agency Problems and Commitment in Delegated Bargaining," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 13(4), pages 703-729, December.
    7. Tiaojun Xiao & Yusen Xia & G. Zhang, 2014. "Strategic outsourcing decisions for manufacturers competing on product quality," IISE Transactions, Taylor & Francis Journals, vol. 46(4), pages 313-329.
    8. Kim, Bowon, 2003. "Dynamic outsourcing to contract manufacturers with different capabilities of reducing the supply cost," International Journal of Production Economics, Elsevier, vol. 86(1), pages 63-80, October.
    9. Baron, David P & Besanko, David, 1992. "Information, Control, and Organizational Structure," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 1(2), pages 237-275, Summer.
    Full references (including those not matched with items on IDEAS)

    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. Mandal, Prasenjit & Jain, Tarun, 2023. "When do competing retailers benefit from sourcing through an intermediary?," International Journal of Production Economics, Elsevier, vol. 266(C).
    2. Yulan Wang & Baozhuang Niu & Pengfei Guo & Jing-Sheng Song, 2021. "Direct Sourcing or Agent Sourcing? Contract Negotiation in Procurement Outsourcing," Manufacturing & Service Operations Management, INFORMS, vol. 23(2), pages 294-310, March.
    3. Nicholas Bloom & Raffaella Sadun, 2012. "The Organization of Firms Across Countries," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 127(4), pages 1663-1705.
    4. Liu, Ting & Albert Ma, Ching-to & Mak, Henry Y., 2018. "Incentives for motivated experts in a partnership," Journal of Economic Behavior & Organization, Elsevier, vol. 152(C), pages 296-313.
    5. Niu, Baozhuang & Chen, Lei & Zhuo, Xiaopo & Yue, Xiaohang, 2018. "Does buy-back induce more fashion sub-sourcing? Contract property and performance analysis," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 113(C), pages 22-37.
    6. Choe Chongwoo & Park In-Uck, 2011. "Information, Authority, and Corporate Hierarchies," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 11(1), pages 1-39, February.
    7. Bin Hu & Anyan Qi, 2018. "Optimal Procurement Mechanisms for Assembly," Manufacturing & Service Operations Management, INFORMS, vol. 20(4), pages 655-666, October.
    8. Theilen Bernd, 2008. "Lobbying and Contract Delegation in Public Procurement," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 8(1), pages 1-35, September.
    9. Dongsoo Shin & Roland Strausz, 2024. "Insourcing Vs Outsourcing in Vertical Structure," Rationality and Competition Discussion Paper Series 495, CRC TRR 190 Rationality and Competition.
    10. Rosar, Frank, 2013. "Optimal procurement and outsourcing of production in small industries," VfS Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79812, Verein für Socialpolitik / German Economic Association.
    11. Bernd Theilen, 2012. "Decentralization of contracts with interim side-contracting," Theory and Decision, Springer, vol. 73(4), pages 561-590, October.
    12. Shen, Jim Huangnan & Zhang, Jun & Lee, Chien-Chiang & Li, Weiping, 2020. "Toward an internal governance structure of China’s large SOEs," Journal of Asian Economics, Elsevier, vol. 70(C).
    13. Ling‐Chieh Kung & Ying‐Ju Chen, 2011. "Monitoring the market or the salesperson? The value of information in a multilayer supply chain," Naval Research Logistics (NRL), John Wiley & Sons, vol. 58(8), pages 743-762, December.
    14. Theilen, Bernd, 1965-, 2011. "Decentralization of contracts with interim sidecontracting," Working Papers 2072/169684, Universitat Rovira i Virgili, Department of Economics.
    15. Te Bao & Yongqin Wang, 2012. "Incomplete contract, bargaining and optimal divisional structure," Journal of Economics, Springer, vol. 107(1), pages 81-96, September.
    16. Daron Acemoglu & Philippe Aghion & Claire Lelarge & John Van Reenen & Fabrizio Zilibotti, 2007. "Technology, Information, and the Decentralization of the Firm," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 122(4), pages 1759-1799.
    17. Elisabetta Iossa & David Martimort, 2012. "Risk allocation and the costs and benefits of public--private partnerships," RAND Journal of Economics, RAND Corporation, vol. 43(3), pages 442-474, September.
    18. Patrick W. Schmitz, 2005. "Allocating Control in Agency Problems with Limited Liability and Sequential Hidden Actions," RAND Journal of Economics, The RAND Corporation, vol. 36(2), pages 318-336, Summer.
    19. Antoine Faure-Grimaud & Jean-Jacques Laffont & David Martimort, 2003. "Collusion, Delegation and Supervision with Soft Information," Review of Economic Studies, Oxford University Press, vol. 70(2), pages 253-279.
    20. Nicholas Bloom & Luis Garicano & Raffaella Sadun & John Van Reenen, 2014. "The Distinct Effects of Information Technology and Communication Technology on Firm Organization," Management Science, INFORMS, vol. 60(12), pages 2859-2885, December.

    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:oup:ijlctc:v:17:y:2022:i::p:980-990.. 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: Oxford University Press (email available below). General contact details of provider: https://academic.oup.com/ijlct .

    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.