Core Businesses In Food Safety In The Supply Chain Strategies And Incentives

The increasing food safety problems have threatened people's health even lives, and significantly affected economies and social activities. Therefore, the governments in many countries strengthen the food safety regulations, while food manufacturers attach more importance to food safety and introduce supply chain management to achieve sustainable development and enhance competences. However, the supply chain management of food safety in China does not work efficiently, which makes difficult to attain dual goals of food safety and profitable operations. The main reasons can be summarised as immature regulation environment, lacking of responsiveness to regulations from food manufacturers and insufficient coordination and incentives for members in the supply chain. However, the existing literature focusing on production and technology strategies responsive to food safety regulations and on coordination and incentives strategies for member enterprises in supply chain are fairly rare.Based on the background mentioned above, the research on strategies and incentives mechanism for core enterprises in food supply chain is performed in this paper. The objective of the research is to find out the ways of enhancing the capability for food safety supply chain management and to achieve food safety and profitability simultaneously. In the paper, game theory, incentives theory and regulation theory are used to support the research, combined with a number of techniques and approaches, such as numerical simulation method, case analysis, etc. In this paper, core enterprises are defined as the food manufacturers who possess core market resources and core competences, and can attract other enterprises to join in the supply chain. They play a central role in controlling and coordinating the supply chain. This paper has been structured in the way that focuses on the production and technology innovation strategies for core enterprises (food manufacturers) responding to food safety regulations, and the coordination strategies and incentives mechanism for all up-and down-stream members in the supply chain. The main contents are organised into following 7 chapters.Chapter 1, introduction. This chapter discusses the background of the research, and the theoretical and practical values. The key terms are defined, and the strucure of the paper is proposed. Then the research questions, the methodology and some innovative contributions are presented.Chapter 2, literature review. It aims to provide an overview of the research that has been undertaken in the areas of food safety, supply chain management, and the stakeholders in the food safety. Then the shortages in existing literature are pointed out for further discussion.Chapter 3, the theoretical basis and framework. Firstly, this section presents the stakeholders of the food safety supply chain and their impacts, particularly focusing on the core enterprises and their strategic activities and incentives. The issue of information asymmetry pertaining to the food safety supply chain is then discussed. Thirdly, the game theory is applied to argue the core enterprises'strategic choices under regulation circumstance, and their coordination strategies and incentives mechanism. The food safety regulation theory is presented afterwards, including regulation behaviours and methods. Finally, an analytical framework is proposed to provide a comprehensive model for analysing the core enterprises'strategies and incentives mechanism in the food safety supply chain.Chapter 4, strategic choices for core enterprises responding to food safety regulations. In this chapter, the evolutionary game theory is adopted to argue that under perfect market condition two core enterprises simultaneously choose strategies of producing quality or poor food, and a game matrix and the evolutionary analysis are demonstrated. Then it is concluded that it is impossible for core enterprises to voluntarily choose strategies of producing quality food under perfect market condition, after applying the numerical simulation method. In the section, the duplicated dynamic equation, dynamic trends and stability of production and technology innovation strategies are discussed, and the game matrix of core enterprises'strategic choices and governments'regulatory choices is formulated. Finally, it comes to the conclusion that core enterprises'choices of production and technology innovation strategies appeal for corresponding regulation policies.Chapter 5, the research on coordination strategies for core enterprises in food safety supply chain. Firstly, based on the total profit optimising model of the food safety supply chain, an analysis and comparison of four damage cost sharing strategies is conducted. The best strategy of determining a reasonable sharing coefficient for supply chain members is worked out, which optimises the total profit of the supply chain and reconciles interests among diverse chain members. Secondly, by comparing the cooperative decision-making pricing model and Stackelberg game pricing model, the coordinated pricing strategies for core enterprises are generated, according to system optimization or Pareto Principle.Chapter 6, the research on incentives mechanism for core enterprises in food safety supply chain. The impact of'adverse selection'and'moral hazard'is imposed on the food safety supply chain management of core enterprises. Thus, regarding core enterprises as principals, the plan, design and outcomes of the incentives mechanism are discussed in this section under the conditions of information symmetry and asymmetry respectively. Particularly, this section aims to explore incentives mechanism from two perspectives to achieve the dual goals of food safety and profitability. One concerns how to encourage suppliers to provide true information, increase production and technological innovation competence, while the other considers how to promote sales efforts of distributors.Chapter 7, conclusions and research prospects. This final section contains implications of the research results, some recommendations, and the areas for further research.The paper may have following innovative contributions.1. Establishing the basic analytical framework of strategies and incentives mechanism for core enterprises in food safety supply chain. The existing literatures mainly concern limited coordination or incentives, and rarely cover the area of total profit and resources allocation of food supply chain from the perspective of core enterprises. In the paper, an integrated analytical framework is proposed based on a variety of relevant theoretical basis. Thus, the research is broken down into production and technology innovation strategies responsive to food safety regulations and coordination and incentives strategies for member enterprises in supply chain. Then by applying the framework, the problems of information asymmetry and interest conflicts among stakeholders of supply chain are fully discussed.2. Exploring the production and technology innovation strategies for core enterprises responsive to food safety regulations. Given the full rationality of game players (governments and enterprises) in most existing literatures about game theory, only regulation costs, fines, corporate earnings and a few other factors are considered. This study proposes the limited rationality of game players and focuses on analyzing the evolutionary game process of production and technology innovation strategies of core enterprises, and works out the specific regulatory constraints that force core enterprises to choose quality food production and technology innovation strategies. A number of other factors are taken into account in the research, such as corporate reputation costs, government support policies, and the independent level of officers, etc. Therefore, the conclusions and recommendations set forth in the paper are more realistic and feasible and may provide references for government policy making.3. Proposing and demonstrating the coordination strategies of core enterprises in food safety supply chain. In the paper, the game analysis tool is applied to discuss the coordinated pricing strategies and damage cost sharing strategies of core enterprises in food safety supply chain. Based on the cooperative strategies, Stackelberg game pricing model and Nash bargaining solution, negotiation strategies are proposed and demonstrated, which makes it possible to realize the Pareto improvement and maximize the overall profits of supply chain. By analysing and comparing the four damage cost sharing strategies, the coordinated strategies of determining a reasonable sharing coefficient for supply chain members are generated, which optimises the total profit of the supply chain and reconciles interests among diverse chain members.4. Designing the incentives mechanism of core enterprises in food safety supply chain. In the paper, the incentives theory and different methods of payment are used, and the incentives mechanism of core enterprises is worked out to effectively solve the problems of'adverse selection'and'moral hazard'arising from information asymmetry in the supply chain. Particularly, the transfer payment method and optimal control principles are adopted in designing the incentives mechanism of encouraging true information from suppliers. A linear payment approach is also used in designing the incentives mechanism of effectively stimulating the suppliers'efforts of production and technological innovation. In the existing literature, few researches cover the area of core enterprises'incentives mechanism under the coexistence of adverse selection and moral hazard. The research in the paper attempts to use the linear payment approach to design the incentives mechanism to effectively promote sales efforts of distributors and reveal their real marketing situation.The conclusions and recommendations set forth in the paper may provide theoretical and practical guide for food safety supply chain management and governments'regulation policy-making. The research results may also contribute to enrich the theory of food safety supply chain management. It is expected that some analysis and findings can provide efficient implications for promoting food safety in China and increasing consumer welfare.