The effects of different fairness reference points on supply chain members' collaborative innovation

Abstract

Fairness has an important influence on supply chain member's cooperative innovation, but few scholars consider the problem under fairness concern, especially lack the diversity analysis of the impact of different fairness reference points on innovation decisions. Therefore, the purpose of this work is to fill this gap. Our study focuses on the issue of collaborative innovation in a supply chain that includes a supplier who is impartial towards fairness and a retailer who places importance on fairness, and it analyzes this problem under three different fairness reference points. We generate our findings from three aspects, as follows: in contrast to the fairness-neutral scenario, the decisions made by the supply chain members become more conservative. Furthermore, the retailer may not always gain benefits from fairness unless the share of innovation costs is low. The innovation level and the retail price are lowest in the supplier's profit fairness reference points case if the retailer has low bargaining power and contributes a small percentage to the channel profit, because although the retailer cares about fairness, the small bargaining power and contribution percentage lead it without confidence to set the lowest price to take revenge on the supplier. The innovation level is higher under the firm contribution profit reference point than the Nash bargaining solution reference point case, which implies the latter has a more influence on collaborative innovation decision-making.