The dynamic decision in risk-averse complementary product manufacturers with corporate social responsibility

Abstract

Purpose

The problem of manufacturer-customer relationships is becoming the key factor of enterprise development, and the contradiction between manufacturer’s objective and customer’s satisfaction still exists. Customers claim for product safety from manufacturers, so manufacturers should take corporate social responsibility (CSR) into their company philosophy or even enhance the degree of CSR during their production. The purpose of this paper is to investigate the influences of parameters on the stability of risk-averse complementary product manufacturers.

Design/methodology/approach

In this study, three dynamic game models are developed: manufacturer 1 – leader Stackelberg game model, manufacturer 2 – leader Stackelberg game model and Nash game model. Using bifurcation diagrams, the largest Lyapunov exponent, 0-1 test for chaos and parameter basin plots, the influences of parameters on the complex behaviors of the three models are analyzed.

Findings

The authors demonstrate that the system exists in deterministic chaos when the parameter exceeds a certain value. The lead manufacturer will not be a beneficiary in chaotic state, and when two manufacturers have the same status the stability of the system weakens, which renders it easily chaotic.

Research limitations/implications

In this paper, the authors make some assumptions, which when applied broadly could lead to some findings.

Practical implications

The authors find that the lead manufacturer will derive the greatest profit and will exert the least effort compared with the follower manufacturer, but that both manufacturers will exert greater effort in the Nash game. The two manufacturers should be cautious while selecting the parameter ' s value so that the stability of the system is maintained.

Social implications

The research will serve as a guide for the two complementary manufacturers in their decision-making process.

Originality/value

The originality and value of the research rest on the use of dynamic thinking in ensuring stability in the quality of complementary products considering the firms’ market powers. The research will serve as a guide for the two complementary manufacturers in their decision-making process.

Citation

Huang, Y., Liu, L. and Qi, E. (2016), "The dynamic decision in risk-averse complementary product manufacturers with corporate social responsibility", Kybernetes, Vol. 45 No. 2, pp. 244-265. https://doi.org/10.1108/K-01-2015-0032