Environment Systems and Decisions

, Volume 33, Issue 2, pp 224–236 | Cite as

Outsourcing sustainability: a game-theoretic modeling approach

  • Alvaro J. MendozaEmail author
  • Robert T. Clemen


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.


Corporate sustainability Buyers–sellers networks Supply chain Stakeholders Stackelberg game 


  1. Bair J (2009) Global commodity chains: genealogy and review. In: Bair J (ed) Frontiers of commodity chains research. Stanford University Press, Stanford, pp 1–34Google Scholar
  2. Bernstein F, Kök AG (2009) Dynamic cost reduction through process improvement in assembly networks. Manag Sci 55(4):552–567CrossRefGoogle Scholar
  3. Brun LC, Gereffi G (2011) The multiple pathways to industrial energy efficiency: a systems and value chain approach. Report prepared for the Environmental Defense Fund (EDF)Google Scholar
  4. Clift R (2003) Metrics for supply chain sustainability. Clean Technol Environ Policy 5:240–247CrossRefGoogle Scholar
  5. Delmas M, Montiel I (2009) Greening the supply chain: when is customer pressure effective? J Econ Manag Strateg 18(1):171–201CrossRefGoogle Scholar
  6. Enkvist PA, Nauclér T, Rosander J (2007, February) A cost curve for greenhouse gas reduction. McKinsey Quarterly 35–45Google Scholar
  7. Fair Labor Association (2012) Independent Investigation of Apple Seller, Foxconn: Report Highlights. Retrieved from
  8. Foran B, Lenzen M, Deyb C, Bilek M (2005) Integrating sustainable chain management with triple bottom line accounting. Ecol Econ 52(2):143–157CrossRefGoogle Scholar
  9. Gereffi G, Humphrey J, Sturgeon TJ (2005) The governance of global value chains. Rev Int Polit Econ 12(1):78–104CrossRefGoogle Scholar
  10. Gupta S, Loulou R (1998) Process innovation, product differentiation, and channel structure: strategic incentives in a duopoly. Mark Sci 17(4):301–316CrossRefGoogle Scholar
  11. Haanaes K, Reeves M, Balagopal B, Arthur D, Hopkins MS, Kruschwitz N (2011) First look: the second annual sustainability & innovation survey. MIT Sloan Manag Rev 52(2):77–83Google Scholar
  12. Harhoff D (1996) Strategic spillovers and incentives for research and development. Manag Sci 42(6):907–925CrossRefGoogle Scholar
  13. Jira C, Toffel MW (2012) Engaging supply chains in climate change. Working paper 12-026, Harvard Business SchoolGoogle Scholar
  14. Kim S-H, Netessine S (2012) Collaborative cost reduction and component procurement under information asymmetry. Working paper No. 2012/33/TOM, INSEADGoogle Scholar
  15. Kleindorfer PR, Singhal K, Van Wassenhove LN (2005) Sustainable operations management. Prod Oper Manag 14(4):482–492CrossRefGoogle Scholar
  16. Lee S (2008) Drivers for the participation of small and medium-sized sellers in green supply chain initiatives. Supply Chain Manag Int J 13(3):185–198CrossRefGoogle Scholar
  17. Locke RM, Qin F, Brause A (2007) Does monitoring improve labor standards? Lessons from Nike. Ind Labor Relat Rev 61(1):3–31Google Scholar
  18. Locke R, Amengual M, Mangla A (2009) Virtue out of necessity? Compliance, commitment and the improvement of labor conditions in global supply chains. Polit Soc 37(3):319–351CrossRefGoogle Scholar
  19. Mas-Colell A, Whinston MD, Green JR (1995) Microeconomic theory. Oxford University Press, New YorkGoogle Scholar
  20. Noci G (1997) Designing ‘green’ vendor rating systems for the assessment of a seller’s environmental performance. Eur J Purch Supply Manag 3(2):103–114CrossRefGoogle Scholar
  21. Plambeck EL, Lee HL, Yatsko P (2012) Improving environmental performance in your Chinese supply chain. MIT Sloan Manag Rev 53(2):42–51Google Scholar
  22. Sarkis J (2003) A strategic decision framework for green supply chain management. J Clean Prod 11(4):397–409CrossRefGoogle Scholar
  23. Seuring S, Müller M (2008) From a literature review to a conceptual framework for sustainable supply chain management. J Clean Prod 16(15):1699–1710CrossRefGoogle Scholar
  24. Talluri K, van Ryzin G (2004) The theory and practice of revenue management. Kluwer Academic Publishers, NorwellGoogle Scholar
  25. WBCSD (2008) Sustainable consumption facts and trends: from a business perspectiveGoogle Scholar
  26. Zhu K, Zhang RQ, Tsung F (2007) Pushing quality improvement along supply chains. Manag Sci 53(3):421–436CrossRefGoogle Scholar

Copyright information

© Springer Science+Business Media New York 2013

Authors and Affiliations

  1. 1.Fuqua School of BusinessDuke UniversityDurhamUSA

Personalised recommendations