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Outsourcing sustainability: a game-theoretic modeling approach

Author

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  • Alvaro J. Mendoza

    (Duke University)

  • Robert T. Clemen

    (Duke University)

Abstract

As a response to stakeholders’ interest in sustainable products and services, an organization may change its approach to sustainability issues, from isolated social and environmental projects to corporate sustainability strategies and practices that are part of their core business. However, many of the efforts associated with these sustainability strategies cannot be directly exerted by focal organizations. We consider the situation in which a focal organization (sustainability buyer) outsources sustainability efforts to another organization (sustainability seller). While buyers cannot directly exert sustainability efforts, they can provide economic or technical support to their sellers in order to incentivize these efforts. We investigate how the effort and support decisions change according to characteristics of stakeholders, buyers, and sellers. Additionally, the presence of sustainability-minded stakeholders may lead to buyers’ competition on the sustainability effort exerted by their sellers. Therefore, we extend our analysis of sustainability efforts and incentives to the case of two competing buyers, and we determine conditions under which sharing a seller is preferred by the buyers to having a separate seller for each buyer.

Suggested Citation

  • Alvaro J. Mendoza & Robert T. Clemen, 2013. "Outsourcing sustainability: a game-theoretic modeling approach," Environment Systems and Decisions, Springer, vol. 33(2), pages 224-236, June.
    • Handle: RePEc:spr:envsyd:v:33:y:2013:i:2:d:10.1007_s10669-013-9443-8
    DOI: 10.1007/s10669-013-9443-8
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    Cited by:

    1. Mehmet Ali Soytaş & Damla Durak Uşar, 2017. "Role of Strategic Interactions in Corporate Sustainability Decisions: An Empirical Investigation," Ekonomi-tek - International Economics Journal, Turkish Economic Association, vol. 6(1), pages 17-46, January.
    2. Xingyi Yang & Xiaopei Dai & Zhenyu Liu, 2023. "Retailers’ Audit Strategies for Green Agriculture Based on Dynamic Evolutionary Game," Sustainability, MDPI, vol. 15(4), pages 1-17, February.
    3. Thomas P. Seager & Zachary A. Collier & Igor Linkov & James H. Lambert, 2013. "Environmental sustainability, complex systems, and the disruptive imagination," Environment Systems and Decisions, Springer, vol. 33(2), pages 181-183, June.
    4. Uşar, Damla Durak & Denizel, Meltem & Soytaş, Mehmet Ali, 2019. "Corporate sustainability interactions: A game theoretical approach to sustainability actions," International Journal of Production Economics, Elsevier, vol. 218(C), pages 196-211.
    5. Qingsong Wang & Xueliang Yuan & Jian Zuo & Ruimin Mu & Lixin Zhou & Mingxia Sun, 2014. "Dynamics of Sewage Charge Policies, Environmental Protection Industry and Polluting Enterprises—A Case Study in China," Sustainability, MDPI, vol. 6(8), pages 1-19, July.
    6. Moira Zellner & Dean Massey & Anton Rozhkov & John T. Murphy, 2023. "Exploring the Barriers to and Potential for Sustainable Transitions in Urban–Rural Systems through Participatory Causal Loop Diagramming of the Food–Energy–Water Nexus," Land, MDPI, vol. 12(3), pages 1-27, February.
    7. Jiayu Chen & Anyan Qi & Milind Dawande, 2020. "Supplier Centrality and Auditing Priority in Socially Responsible Supply Chains," Manufacturing & Service Operations Management, INFORMS, vol. 22(6), pages 1199-1214, November.

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