Title: Supply chain structure and risk attitude in the selection of environmentally friendly products

Authors: Gang Xie; Ning Zhang; Mao Jiang

Addresses: Academy of Mathematics and Systems Science, Chinese Academy of Sciences, Beijing 100190, China ' Academy of Mathematics and Systems Science, Chinese Academy of Sciences, Beijing 100190, China ' Academy of Mathematics and Systems Science, Chinese Academy of Sciences, Beijing 100190, China

Abstract: Compared with ordinary products, environmentally friendly products (EFPs) usually have higher cost for R&D and uncompetitive price. Also, there may be technological renovation and policy uncertainty leading to volatility of demand, which causes high risk to firms in green supply chains. Therefore, risk reduction and risk attitude of decision-makers (manufacturers and retailers) should be considered. In this study, we investigate the selection of EFPs with the consideration of the tradeoff between risk and return in two supply chain structures: vertical integration and a decentralised setting. A case study of a green supply chain offering household electrical appliances in China is presented to illustrate related issues. The results suggest that risk attitude has a significant impact on the selection of EFPs and a green supply chain with vertical integration achieves better environmental performance than a decentralised one.

Keywords: supply chain structure; risk attitudes; environmentally friendly products; portfolio selection; household appliances; electrical appliances; China; product selection; supply chain risk; supply chain management; SCM; green supply chains; risk reduction; vertical integration; decentralised; environmental performance.

DOI: 10.1504/IJAMS.2014.059292

International Journal of Applied Management Science, 2014 Vol.6 No.1, pp.22 - 44

Published online: 17 Feb 2014 *

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