Green Procurement and Outsourcing

Procurement and outsourcing are essential links in enterprises’ production and operation. They have varying impacts on value chain structures, enterprises’ profits, and environmental sustainability. Government environmental regulations and the growing consumer demand for green consumption have prompted enterprises to choose green procurement models. Accordingly, this chapter discusses the relationship between procurement and outsourcing and enterprises’ green growth. It analyzes the strategic decision of enterprises to choose direct procurement or procurement outsourcing based on the motivation and risk factors of outsourcing. Following the theoretical analysis, a procurement game model comprising the original equipment manufacturer, contract manufacturer, and suppliers is constructed. The results show that when enterprises choose direct procurement, the wholesale price of suppliers is lower but the processing price is higher than that for outsourcing; when the market scale is small, enterprises opt for direct procurement. Moreover, procurement outsourcing is more environmentally sustainable than direct procurement.