Technology driven alliance for environmental and social responsibility in power supply chains

Motivated by the practical application of information and communication technologies (ICT)-based innovations in environmental and social responsibility (ESR) investment, this study investigates a sustainable power supply chain that consists of a traditional energy power generation firm (TEF), a renewable energy power generation firm (REF) and a downstream power distributor (PD). Each supply chain member can invest in ESR to achieve energy conservation and emission reduction, and thereby gain economic benefits. To achieve higher power level for better ESR investment, the TEF may actively form an alliance with the REF or the PD, or not, which leads to three different alliance strategies, i.e., Strategy HA, Strategy VA, and Strategy NA, respectively. The results show that NA is the equilibrium strategy when the TEF's investment cost is low while the PD's investment cost is medium. However, when the TEF's investment cost is medium while the PD's investment cost is low, VA is the equilibrium strategy. Moreover, when the investment cost of the TEF and the REF are both low, HA is the equilibrium strategy. In the other cost intervals, the three power firms will not invest in ESR simultaneously, and consequently the alliance strategy has no effect on the revenue allocation. Therefore, the TEF forms no alliance with either the REF or the PD. By comparison with the unaligned case, we find that alliance not only benefits the TEF, but also the other firms in the power supply chain as well as the whole society resulting from the improved ESR investment, which achieves a “win-win-win” situation.