An Experimental Study on the Decision-Making of Internal Supply Chains in Group Corporations

Abstract

With the fast development of group companies in China, more and more supply chains are integrated in group corporations. This kind of internal supply chain which is composed by related companies is different from the traditional one. Through 4 scenes experimental study whose participants are MBA students, we find that a subsidiary manager who is suggested to share interest with other related companies in the same group will not accept abnormal related party transactions, such as purchase and sales, which is similar with what will happen in the traditional supply chain. Because internal supply chain members are related parties, they have more choices to allocate interests. Principal loan is favorable when there is only one plan provided to managers who will be the lenders, but they prefer to provide guarantee on loans borrowed by related companies when there are several optional plans.