Happy together? Insights and implications of viewing managed supply chains as a social dilemma

Supply chains are beginning to displace firms as the competitive entity in the global marketplace. Managed supply chains offer the promise of added value through proactive cooperative efforts among participating firms. However, as a strategic alliance, managed supply chains represent a form of social dilemma: supply chain alliances may fail because participating firms fear opportunistic behavior on the part of other alliance participants, and as a consequence underinvest their information and resources into the alliance. The interdependence structure of the alliance may contribute to this problem. Viewing managed supply chains as a form of social dilemma also identifies solutions that may be implemented unilaterally by individual firms or jointly by the alliance to maintain the "indispensable virtue" of high trust that allows supply chains to effectively create added value. (c) 2006 Elsevier B.V. All rights reserved.