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Biomass supply chain coordination considering government subsidies and corporate social responsibility

Long Yu (Department of Management Science and Engineering, University of the Chinese Academy of Sciences, Beijing, China) (Yunnan Water Investment Co., Limited, Yunnan, China)
Qianqian Zhang (Department of Management Science and Engineering, Beijing University of Chemical Technology, Beijing, China)
Jun Wu (Department of Management Science and Engineering, Beijing University of Chemical Technology, Beijing, China)
Weina Liu (Yunnan Water Investment Co., Limited, Yunnan, China)
Lijuan Ding (Department of Management Science and Engineering, Beijing University of Chemical Technology, Beijing, China)

Kybernetes

ISSN: 0368-492X

Article publication date: 1 October 2024

18

Abstract

Purpose

The purpose of this paper is to investigate the impact of various decision-making approaches and government subsidies on supply chain performance, aiming to enhance the profits of disposal firms and retailers as well as to improve social welfare.

Design/methodology/approach

In this paper, a two-echelon biomass supply chain composed of a disposal firm and a retailer is developed. Firstly, considering the effects of government subsidies, we analyze biofuels prices, corporate social responsibility levels, social welfare and supply chain profitability under centralized and decentralized decision-making scenarios, respectively. Furthermore, we assess how subsidies influence pricing, market participation, profitability and social welfare. Secondly, we propose a revenue sharing–cost sharing contract to enhance the profits of the disposal firm and retailer. Thirdly, we extend the supply chain to a disposal firm and two retailers and explore the impact of competition intensity on corporate decision-making behavior. Finally, numerical analysis is conducted by taking one biomass energy firm as an example to support the results.

Findings

Our research finds that (1) Equilibrium strategies under the centralized decision-making scenario are greater than those under the decentralized decision-making scenario. Centralized decision-making can increase market demand and consumer surplus. (2) Government subsidies can promote corporate social responsibility levels, despite causing a slight increase in retail price for biofuels. When market competition intensifies, companies usually reduce their investment in CSR, and this trend is particularly pronounced in the absence of subsidies. (3) In both the decentralized and the centralized decision-making scenarios, increasing conversion rates and the CSR coefficient can significantly increase the overall profitability and social welfare.

Research limitations/implications

A three-echelon biomass supply chain involving collection station, disposal firm and retailer can be studied in the future.

Originality/value

By examining the effects of subsidies on CSR engagement and market outcomes, our study contributes valuable insights into policy design for promoting sustainable practices in biomass industries.

Keywords

Acknowledgements

This paper is supported by National Social Science Foundation of China (No.22BGL111). We thank the Associate Professor Guo Libin for her assistance in the modeling section. We would like to express our gratitude to the editors and the reviewers for their feedback that improved this paper.

Citation

Yu, L., Zhang, Q., Wu, J., Liu, W. and Ding, L. (2024), "Biomass supply chain coordination considering government subsidies and corporate social responsibility", Kybernetes, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/K-02-2024-0310

Publisher

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Emerald Publishing Limited

Copyright © 2024, Emerald Publishing Limited

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