Improving Supply Chain Integrity and Trust: An Analytical and Experimental Study

• In Event: SUPPLY CHAIN MANAGEMENT: Emerging Topics in Supply Chain Managament-1

Abstract

This paper studies the influence of integrity and trust or trustworthiness in a dyadic supply chain relationship. We consider a setting where the buyer can influence the supplier's trust and production decisions through a pre-announced integrity level. After an integrity breach, the buyer must decide on costly expenditures to restore integrity, which can influence market demand and the supplier's profit. We analytically derive equilibrium strategies and design an experiment to capture human behavior biases. This research helps us gain insight into the theoretical foundations and practical implications of integrity, trust, and trustworthiness in supply chain relationships.

Authors

• Wen Zhang, Baylor University

• Matthew A. Douglas, Baylor University

• Pedro Martinez Reyes, Baylor University