Evolutionary Game of Vertical Cooperation and Innovation between Civilian and Military Enterprises: A Civilian-Military Integration Supply Chain System with Chinese Characteristics

Abstract

The establishment of a civil-military integration supply chain system is the cornerstone of China’s strategic development in military-civilian integration. It is essential to explore cooperative innovation and development between upstream civilian enterprises and downstream military enterprises within the supply chain to optimise resource allocation and promote the sustainable use of civil-military resources. This exploration is a prerequisite for accelerating the formation of the civil-military integration supply chain system and holds significant importance for realising the internal synergy between the civilian industry and the military industry. However, utilizing the evolutionary game model as a foundation, this study delves into the impact of absorption capacity, transformation and integration capability, network synergy, and change and innovation capacity on the vertical cooperation and innovation behaviour within the supply chain of civil-military integration enterprises. Firstly, civilian enterprises are more cost-sensitive concerning collaborative innovation investments compared to military enterprises. Excessive costs can discourage collaboration between civilian and military entities. Secondly, strong exploratory and absorptive capabilities, along with network synergies, can enhance the benefits of cooperation and innovation among these enterprises, but they also introduce the risk of opportunistic “free-rider” behaviour. Thirdly, the dynamics of the technology and product chains are influenced by an excess supply for civilian enterprises, while the opposite is true for military enterprises. Finally, a strong capacity for transformation and integration fosters cooperative and innovative behaviours among enterprises, with civilian enterprises exhibiting greater responsiveness. This study brings new research perspectives to the forefront, exploring vertical cooperation and innovative development within supply chain enterprises, particularly through the lens of supply and demand dynamics. Additionally, it offers practical recommendations aimed at helping the government expedite the establishment of integrated military-civilian supply chains and foster the synergistic development of the two key sectors: the military and civilian economies.