Conformity pressure to demand–enhancing investments among supply chain parties

Purpose This study aims to consider the impact of conformity pressure (peer pressure) on demand-enhancing investments among dual-channel supply chain parties. Nowadays, IT development helps manufacturers open direct channels easily, and the complexity of distribution through multiple channels leads to the difficulty of supply chain coordination. In this situation, many researchers and practitioners pay attention to psychological factors to coordinate the supply chain because the behavior of supply chain parties is different under psychological factors. Therefore, the authors shed light on conformity pressure among supply chain parties, which is one of the psychological costs for managers. Design/methodology/approach Based on the non-cooperative game theoretical approach, this study analyzes the effect of conformity (peer pressure) on decision-making and surplus analytically. Findings From this study’s analysis, we demonstrate that conformity pressure improves total profits in a dual-channel supply chain under specific environments (positive effect). On the other hand, conformity pressure always harms consumer surplus (negative effect). This study finds that, depending on the tradeoff of the two effects, the total surplus improves by conformity pressure. Originality/value The result proposes the following managerial insights. First, conformity pressure harms consumer surplus, and therefore, if firms emphasize customer value, they should not lean conformity pressure on supply chain partners as a managerial insight. Second, from the perspective of supply chain coordination, conformity pressure has a bright and dark side for the total profits of the supply chain.