The influence of distributional fairness concern on quality co-creation mobile application supply chain: Exogenous and endogenous revenue-retaining mechanisms

Abstract

This research examines the quality co-creation practice in the mobile application supply chain composed of a mobile application developer and a mobile application distributor within a revenue-sharing framework. We analyze whether the distributional fairness concern of supply chain entities and the endogeneity or exogeneity of revenue-retaining ratio exert great influence on supply chain decisions and performance. Through analysis, we obtain following results. Firstly, the distributional fairness concern of supply chain entities drops down service price in both exogenous and endogenous revenue-retaining ratio contexts. Secondly, the developer’s emphasis on profit distribution fairness reduces service quality in the exogenous revenue-retaining context but enhances it in the endogenous revenue-retaining model. Thirdly, the developer achieves profit increment when he is the only one demonstrating distributional fairness concern but the distributor’s earnings shrink in his own distributional fairness concern situation. Finally, we derive in both exogenous and endogenous revenue-retaining contexts, the supply chain entities may simultaneously incorporate distributional fairness concern into internal decision making standards and fall into the prisoner’s dilemma. Additionally, we further explore three extended models: sequential strategic decision-making, considering the choice between exogenous and endogenous contracts, and bargaining over revenue-retaining ratio. Our findings demonstrate that, across all three extended models, supply chain entities may still fall into the prisoner’s dilemma.