Analyzing rational decision‐making's effect: Empirical evidence from Green supply chain

Abstract

Under the global environmental degradation and intense competition, firms are increasingly resorting to green supply chains to achieve sustainability, and rational decision‐making by managers is unprecedented desired in management supply chain operations management. This study investigates the effect of rational decision‐making in green supply chains on environment, social welfare, and sustainability. Based on a sample of 856 firms that disclose green supply chain, we established a supply chain game theory model consisting of manufacturers and retailers, where retailers are risk averse, and used regression analysis to test hypotheses. We find that the micro‐level empirical evidence on rational decision‐making in green supply chain does exist—namely, rational decision‐making not only has a beneficial effect on the environment and social welfare, but also can improve the sustainability of the supply chain. The results give valuable insights to supply chain management in rational decision‐making and provide application recommendations for managers by constructing a strategic initiative for sustainable development.