Sourcing from supplier in the presence of financial service providers’ information asymmetry and quit probabilities
Industrial Management & Data Systems
ISSN: 0263-5577
Article publication date: 21 May 2024
Issue publication date: 18 June 2024
Abstract
Purpose
Considering the financial service providers’ (FSPs) information asymmetry in evaluating the supplier and their distinct quit probabilities, we want to examine the supplier’s preference of the financing schemes if both the bank and the online platform exist and how the buyer sets the contract terms in the two financing schemes.
Design/methodology/approach
We establish a Stackelberg game model to capture the interactions among three parties, i.e. a supplier, a capital-sufficient buyer and an FSP (either a bank or an online platform), within a first-time contract.
Findings
In the non-FSPs’ quit case, the buyer’s profit is higher under the bank loan scenario, while the supplier’s profit performs adversely. The supply chain’s profit is heavily dependent on the buyer’s profit difference between the two financing schemes. Moreover, we find that the supplier borrows the money to exactly cover the production cost. The equilibrium solutions of the FSPs’ quit case and of the capital-sufficient supplier’s case are also derived.
Originality/value
First, we assign different risk profiles to different FSPs in our setting so that modeling a previously ignored but practically significant problem. Second, we innovatively take the FSP’s quit probability into account in our model. Third, we elucidate how these factors can influence the relative efficiency of the two types of financing schemes and the settings of the contract, which further complements and extends the current SCF research.
Keywords
Acknowledgements
The work described in this paper was substantially supported by a grant from the Research Committee of The Hong Kong Polytechnic University under student account RK37.
Citation
Huang, C., Wu, S.-M., Ma, H.L. and Chung, S.H. (2024), "Sourcing from supplier in the presence of financial service providers’ information asymmetry and quit probabilities", Industrial Management & Data Systems, Vol. 124 No. 6, pp. 2120-2150. https://doi.org/10.1108/IMDS-09-2023-0694
Publisher
:Emerald Publishing Limited
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