The effects of a trust mechanism on a dynamic supply chain network

  • Authors:

  • Yunzhang Hou;Yu Xiong;Xiaoling Wang;Xi Liang

  • Affiliations:

  • School of Management, Fudan University, Shanghai 200433, China;School of Economics and Business Administration, Chongqing University, Chongqing 400044, China and Norwich Business School, University of East Anglia, Norwich NR4 7TJ, UK;School of Law and Politics, Shanghai Normal University, Shanghai 200234, China;College of Finance & Economics, Chongqing Jiaotong University, Chongqing 400074, China

  • Venue:
  • Expert Systems with Applications: An International Journal
  • Year:
  • 2014

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Abstract

Recognizing trust as the basis for firm cooperation, we investigate how a trust mechanism affects a supply chain network using a dynamic multi-agent and multi-stage model that incorporates three supplier selection rules: a preferred price rule, a preferred trust rule, and a preferred random rule. We use this model to explore the impact of the three rules on supply chain performance and bankruptcy propagation under the conditions of external disruption, bank rate, and new firms entering the market. Our results identify the preferred trust rule as the supplier selection method that can in most cases best improve the total revenue of the whole supply chain network. In terms of firm bankruptcy, on the other hand, it is the preferred random rule that has the least impact and the preferred price rule that has the most.