American Journal of Industrial and Business Management, 2013, 3, 418-428 Published Online August 2013 (
The Study of the Supply Chain Cooperation Mechanism
Based on the “Information Economic Man Assumption”
Min Zhang1, Zhenggang Chi2
1Department of Economics and Management, Huizhou University, Huizhou, China; 2Department of Electronic Science, Huizhou
University, Huizhou, China.
Received May 6th, 2013; revised June 6th, 2013; accepted July 6th, 2013
Copyright © 2013 Min Zhang, Zhenggang Chi. This is an open access article distributed under the Creative Commons Attribution
License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
Widely accepted social regulations are playing an important role in influencing human cooperation, which largely re-
duces the demand for information and helps in forming a stable cooperation partnership. Based on this, we put forward
a rational and social consistent economic agent mode—The “Information Economic Man Assumption”. Taking Field
Theory for reference, we established the organizational information mode and introduced the concept of capital vector.
Also the capital vector of economic organization and value orientation are taken as core variables, thus we analyze the
basic condition of cooperation maintenance from economic, cultural and moral factors at the same time.
Keywords: Information Economic Man Assumption; Capital Vector; Organizational Information Field Mode;
Cooperation Mechanism; Dynamic Supply Chain; Stable Supply Chain
1. Introduction
Being a core problem in supply chain management, the
collaborative relationship among relative enterprises of
the supply chain, which is also called the supply chain
collaboration mechanism, determines the collaboration
efficiency of supply chain [1]. So far, this is a hotspot for
research on supply chain management. Furthermore, the
research results are mainly concentrated on the estab-
lishment and the evaluation and option of supply chain
partnership [2-5].
The research on the nature of supply chain cooperation
is mainly based on the Rational Economic Man Assump-
tion of Western Economics, using Non-Cooperative
Game Theory as its basic method of economic analysis.
But this kind of analysis can’t explain all the phenomena
of supply chain cooperation, because it considers eco-
nomic interest as the only one variable that has influence
on the supply chain cooperation mechanism. The man-
agement type that follows this analysis is “Equity First”
Management. However, this type of management has
restrained the development of major multinational cor-
porations in some way. For example, the “Equity First”
Management of the Royal Dutch Shell Company en-
countered a terrible crisis in the 1990s. Its relationship
with major stakeholders like environmental organizations,
consumers, the public and communities had been dete-
riorating, which therefore rapidly caused the austere
reputation and business crisis [6]. It was the growing
contradiction between the company and the different
stakeholders that forced the company to rethink profoundly
about its traditional management mode and approach and
gradually carry out reforms of it. Finally in 1997, a
management mode based on stakeholders was proposed
by the company, bringing with it overall adjustments and
modifications of its original commercial principles. The
Shell General Business Principles (1997) consisted of ten
parts. Of these, “Introductory Theory”, “Target”, “Re-
sponsibility”, “Health, Safety and Environment” and
“Community” these five parts fully embody stakeholder
management concepts [7], which broke through “Equity
First” Management and provided the basic system for the
development and improvement of the Stakeholder Man-
agement. Yet the corresponding innovative basic theory
of Stakeholder Management didn’t have a significant
breakthrough, the theory still continued to use the classi-
cal economic analysis method based on the Rational Eco-
nomic Man Assumption, transforming the demand of
diversified interest from every stakeholder to simplex
economic interest index and further more optimize it.
With the trend for economic globalization, the cultural
background of the parties involved in the supply chain
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The Study of the Supply Chain Cooperation Mechanism Based on the “Information Economic Man Assumption” 419
differed, which might cause interest diversification; there-
fore it exerts an effect on the cooperation of supply chain.
In this situation, if we still use the Rational Economic
Man Assumption and try to convert all the influencing
factors of supply chain cooperation mechanism into a
single economic interest index, it will be difficult for the
final analysis results to achieve a satisfactory, real ex-
planation. Thus, it’s necessary to study the supply chain
cooperation mechanism beginning with the most funda-
mental way of analysis, seek to breakthrough on basic
theories in order to achieve a satisfactory explanation.
2. The Predicament of Rational Economic
Man Assumption in Supply Chain
Cooperation Mechanism
2.1. The Modern Predicament of Rational
Economic Man Assumption
The basic meaning of the Rational Economic Man As-
sumption assumes self-interest and the principle of
maximizing it. However, this classical meaning has en-
countered an un-surmountable modern crisis [8]. The
main problem is that Rational Economic Man has infinite
capacities and ethical dilemmas [9]. The development of
modern economic theories necessitates a new interpreta-
tion of this problem. For instance, Simon’s Bounded Ra-
tionality [10] and Williamson’s Contracting Man As-
sumption [11,12] have given a necessary correction of
the capacities of the Rational Economic Man Assumption,
which also have taken the influence of information limi-
tation into account but without any correction of the ba-
sic principle self-interest assumption. Therefore the ethi-
cal dilemma problem of the Rational Economic Man
Assumption has not been solved, and it is still limited,
especially in the explanation of the human cooperation
mechanism and cooperation decisions.
Modern economic society has the high degree of divi-
sion and close coordination, and cooperation is one of the
basic behavioral traits. According to the research results
of other subjects apart from Economics, the main social
norms for humans in social activities don’t include the
principle of utility maximization based on individual
ration. Especially when the information is incomplete,
people infer principles depending on limited intuition
[13]. Keynes indicated that, most or all the events can be
decided by a general principle of simple intuitive judg-
ment [14]. Among these intuitive inferences, the moral
factor plays an important role. As far as all the evidence
available is concerned, virtue is at the core of human
behavior [15]. This shows that there are human interac-
tive models which are highly opposed to each other
among different subjects. Economics traditionally con-
siders individuals as rational and self-centred profit
maximizing people. In contrast, Sociology thinks that
individuals are a highly socialized, self-less and virtuous
force attempting to play a social role and having high
regard for the recognition and self-esteem of others [16].
2.2. The Predicament of Rational Economic Man
Assumption in Supply Chain Cooperation
In other words, self-regard is an instinct in human beings
that live in groups. However, this is not the only instinct.
As beings living in groups, cooperation is another human
instinct. Whereas, the individualism of Rational Eco-
nomic Man Assumption rooted in western culture is
against collectivism and the idea of harmony of eastern
Confucian culture. Thus, many scholars gave incisive
criticism to the Rational Economic Man Assumption.
Basically speaking, the Rational Economic Man As-
sumption with its excessive preference of human nature
and its ignorance of the nature of society misinterprets
humans and human society [17]. The domestic and for-
eign scholars have created many other kinds of economic
man models [18], such as Mayo’s Social Man Assump-
tion, Maslow’s Hierarchy of Need, Maigret’s Hypothesis
of Dual Human Nature, Peter’s Duality of Human As-
sumption, Schein’s Four Hypothesis of Human Nature,
as well as Changhong Li’s Hypothesis of the Real Man
[19]. But these assumptions have a limitation, that is to
say, that lacking strong logic and explanatory power,
they haven’t reached the general applicability of Rational
Economic Man.
Meanwhile, empirical research results of the coopera-
tion among enterprises can’t always be consistent with
the Rational Economic Man Assumption and the prince-
ple of utility maximization in Economics. This is because
the stability of supply chain cooperation can’t be realized
only by the individual utility maximization of each en-
terprise. Also the equality of income distribution of each
member of the supply chain should be guaranteed. Some
scholars have studied supply chain cooperation focusing
on non-profit factors such as enterprise cultures [20];
nonetheless they didn’t ultimately put forward the Eco-
nomic Man Assumption model as corresponding to the
phenomenon of supply chain cooperation.
Although the present popular Rational Economic Man
Assumption originated from the classical Economics of
Adam Smith, there are essential differences between the
two. The economics theory introduced by Adam Smith is
originally a science that studies treasure and human.
When modern economics developed into a science that
purely studies the distribution of scarce resources, its
essence is to separate human economic action which can
provide a convenient analysis of economic function by
using a simple mathematical mode, but it also radically
left out the most basic moral restraint that economic man
might have. It can be said that the development of mod-
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The Study of the Supply Chain Cooperation Mechanism Based on the “Information Economic Man Assumption”
ern economic analysis methods obviously deviate from
Smith’s original insights [8]. Therefore, it’s necessary to
look back on and analyze the methods of modern eco-
nomics analysis, especially classical economic analysis
methods, to explore the scientific and rational ones which
provide a theoretical basis for the analysis of the supply
chain cooperation phenomenon.
3. Analysis of Human Cooperation
Mechanism Based on Classical Economics
According to Classical Economics initiated by Adam
Smith, economic man has two instincts rationality and
sociality at the same time. The former emphasizes on
self-interest and utility maximization, yet the latter con-
centrates on other-interest and active operation aware-
ness. Smith pointed out in The Wealth of Nations (1776)
that, “It is not from the benevolence of the butcher, the
brewer, or the baker that we expect our dinner, but from
their regard to their own interest”. This saying is always
considered as the elemental description of rationality,
however, just on the same page of this book, Smith
added “Give me that which I want, and you shall have
this which you want, is the meaning every such offer”
[21]. Consequently, from Smith’s point of view, the pur-
suit of self-interest is built on the foundation of fair trade
which more accurately aims to balance self-interest and
other-interest. In The Theory of Moral Sentiments (1759),
Adam Smith further stated the sociality of man. “How
selfish so ever man may be supposed, there are evidently
some principles in his nature, which interest him in the
fortune of others, and render their happiness necessary to
him, though he derives nothing from it expect the pleas-
ure of seeing it” [22]. Moreover, Smith believed “Man,
according to the Stoics, ought to regard himself, not as
something separated and detached, but as a citizen of the
world, a member of the vast commonwealth of nature. To
the interest of this great community, he ought to at all
times be willing that his own little interest should be sac-
rificed” [22]. There are still some scholars contending
that “Smith’s fundamental thesis is that human beings
tend to build up a hierarchical model and an introverted
social structure. Thus they are willing to obey the eti-
quette and pursuit higher social status because they are
motivated by the desire of social recognition.” This de-
sire, which material self-interest subordinated to, is im-
material [23]. Above all, the utility maximization target
that individual rationality pursues is social. Therefore,
human rationality is closely associated with sociality.
From another perspective, since rationality and sociality
exist in the same individual, the two should be consistent.
Further more, people adjust individual behavior patterns
mainly focusing on society and then rationality because
the basic means of development is cooperation.
Now we try to analyze the conditions under which so-
ciality and rationality can reach cooperative agreement
and maintain a cooperative relationship, from different
3.1. Analysis of the Cooperation Mechanism
under Bounded Rationality
Based on Game Theory, self-interested individuals can
reach Pareto cooperation equilibrium under complete
information and infinitely repeated games. However, in
the real world, there is some extent of incomplete infor-
mation, which affects the personal, rational expectation
of future income. Then it has an influence on the result of
the game and causes difficulty in reaching Pareto coop-
eration equilibrium.
The higher the sharing degree of social information in
time and spatial dimension, the more definite the future
income will be. Rational pursuit results in concern about
long term benefit, consequently stable cooperative rela-
tionships will be formed easily. Conversely, incomplete
information sharing caused by the like of geographical
and time limitations can result in uncertainty of future
benefit. Thus rational pursuit can lead to the fact that
individuals emphasize more their immediate interest
rather than long-term interest, which makes stable coop-
eration difficult.
Therefore, in the view of rationality, information is the
key variable for cooperation. In other words, the degree
of information sharing directly determines the results of
cooperation. Due to limited individual capacities, people
can only live in society with mutual help. It is a simple
view of rationality, that only with complete social infor-
mation sharing can people realize a win-win situation
and cooperation. In contrast, people tend to harm each
other if social information sharing is incomplete, which
thereby is a threat to the survival and development of
human society.
Sound social system helps increase social information
sharing, consequently making it possible for people to
cooperate. If the present cooperation might not reach the
expected goal, quitting it and looking for new coopera-
tion opportunities will be another rational option. How-
ever, even a perfect system can not meet the all the needs
of the complete information Game Theory because social
information sharing is always limited never mind human
analyzing and calculating ability. Basically, only when
we are faced with an uncomplicated situation can we
make decisions according to the derivations of rational
analysis. Yet when facing a complicated situation, if we
simply depend on rationality, no solutions will be offered.
Thus, in view of the need for human survival and devel-
opment, the problem of the lack of individual rationality
and information sharing should be improved. What we
can do is to construct reasonable social norms, cultivate
citizens’ moral consciousness and strengthen individuals’
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The Study of the Supply Chain Cooperation Mechanism Based on the “Information Economic Man Assumption” 421
awareness of society, which further contribute to the ef-
ficiency of human cooperation, and social development.
3.2. Analysis of Effect Mechanism of Sociality on
Cooperative Behavior
As recent research studies show, most human co-opera-
tions are not due to the Reciprocal Behaviors of Repeti-
tive Game Theory but sociality, which means individual
behavior not only works under the principle of self-in-
terest but also the premise that humans usually care about
others’ benefits and feelings [24]. A study of neuron
Economic experiment indicates, men’s instinctive than
rational behavior can form an intuitive and emotional
mechanism for making decisions [25]. In society, intui-
tion depending on individual decision-making has its
regularity to conform to and the former is originated
from an individual’s code of conduct. As a result, as long
as we make a comparison between present information
and its related code of conduct then we can determine
what action to take. An individual’s code of conduct is
the result of education during their formative years, and
is closely related to the social environment where indi-
viduals grow up. Society consists of moral values passing
from generation to generation. These values are realized
through the internalization [26].
Therefore, sociality means that an individual’s code of
conduct is consistent with the social norm, making each
game party reduce the need for information in decision
making within the common social norm, then it rapidly
develops into relative game balance and forms a stable
cooperation. Obviously, the stability of cooperation is
directly determined by how relative social norms are
recognized by individuals. Only social norms widely
accepted by members of society can become coordinators
among members. That is to say, an individual’s coopera-
tive information threshold based on social norm is an
important factor to cooperation.
3.3. Analysis of Interaction between Rationality
and Sociality
In the cooperative behaviors of human beings, rationality
and sociality play important roles and they become com-
plementary to each other. In the ideal condition, the ex-
ploration of rationality by individuals leads to the result
of social behavior. In other words, the emergence of co-
operative behavior is caused by the pursuit of self-inter-
est. The shortage of information and the defect of indi-
vidual rational ability are improved and made up by the
social norm, so that it can guarantee the possibility of
cooperation with rational individuals in reality. In this
situation, individual utility maximization is ensured by
common social norms. In addition, social norms are to
keep social utility maximization in the long term by co-
ordinating individual behaviors, and indirectly maintain-
ing individual utility maximization.
Meanwhile, rationality and sociality are relatively
separated. Especially, the formation and perfection of
social norms, which are widely agreed by the social
members, can not be deduced by the interaction of the
rational agent model. Society being an organic system,
its characteristics can not be explained by the individual
characteristics which are at the lower level. Obviously,
the Rational Economic Man Assumption in modern eco-
nomics is a one-sided analysis of human economic be-
havior under ideal conditions. Accordingly, it can only
infer a mechanical and low-level social norm, which is
different from realistic social structure.
The formation and improvement of social norms can
be explained by genes—a Socio-biological mode of cul-
ture common evolution [27]. Or it can be explained by
the emergent properties of Complexity Theory. In terms
of the development and history of human society, the
advanced social norm is usually designed. The designers
are supposed to see thing beyond limits and to be more
concerned with a long-term vision in both space and time
dimensions. Only in this way, can they design a perfect
social norm like the founder of Eastern Confucian culture
Confucius and the founder of Western Christianity Jesus.
What we need to point out is that the basic premise for
individuals to survive in a complicated environment is a
concern for the self-interest of individual rationality.
Thus sociality can help improve the shortage of individ-
ual rationality but not replace totally. Otherwise, the sur-
vival of individuals would remain a problem. Like so-
ciality, individual rationality has its own independent
evolution and development. Certainly, the evolution and
development of rationality and individual rationality act
and react upon each other, which is also an interrelated
interaction. However, we still lack incomplete theory
analysis, especially brief mathematical mode analysis.
Therefore, it is necessary to seek theoretical innovation
that is based on coordination between individual ration-
ality and sociality. In order to achieve the real explana-
tion and compatibility with Confucian culture, it starts
with individual sociality and brings ethical and cultural
factors into the theoretical analysis of economic activity.
4. Organization Information Field Mode
Based on Information Economic Man
As mentioned before, individuals try to seek cooperation
opportunities in social interaction by constantly search-
ing for and comparing various kinds of massive and in-
complete information. Meanwhile, the target individuals
seek is not always a single one economic one. That is
why we cannot realize an optimized decision of individ-
ual rational target while only relying on personal ability
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The Study of the Supply Chain Cooperation Mechanism Based on the “Information Economic Man Assumption”
to analyze and calculate. The existence of social norms
has largely simplified the improvement of individual
decision-making and lowered the cost of the realization
of individual cooperation, which leads to a win-win
situation for both sides. Thus, to highlight the function of
social norms in Economic Man Assumption Mode is
necessary because it makes the explanation of economic
man’s decision-making in reality more accurate. None-
theless, individual social norms vary and individual abili-
ties differ a great deal. To give a more clear explanation
of these problems, an economic man action mode is re-
quired to be set up from the view of information, taking
capital factors and value orientation factors as core vari-
ables. Under this premise, we analyze the individual co-
operation mechanism then the cooperation mechanism of
enterprises within the supply chain.
In consideration of the Space Effect of information
spreading, the concept of field in Physics is taken to
build up the Cooperation Information Field. The word
field is a Physics concept abstracted from a great deal of
physical phenomena, which are closely related to a cer-
tain Physics variables. The word field refers the distribu-
tion of physical quantity in space area. If every point of
the whole space or part of the space has a certain corre-
sponding value, then the field of this kind of physical
quantity is confirmed in this space. If this kind of physic-
cal quantity is a mathematical quantity, we call this field
a scalar field. If this kind of physical quantity is a vector,
we call this field a vector field [28]. Because capital and
value orientation factors must be taken into account, the
Cooperation Information Field should be described as a
vector field.
4.1. Information Economic Man Assumption
In order to simplify the analysis, we assume that society
consists of different organizations which consist of indi-
viduals. Organization here means the general economic
organization whose major function is to coordinate col-
laborative relationships among individuals including
market, enterprises and the osculant organizations be-
tween market and enterprises. Individuals can only play a
role in organizations and participate in activities but not
independently work in economic activities without or-
ganizations. But individuals can participate in more than
one economic activity of organizations. Supposing the
individuals have the basically coherent code of conduct
and also some differences, then we call the common part
of individual behavior, the organization standard. Like-
wise, there are differences in the code of conduct of
every organization which forms society and similarities
that are called the social norm.
In social interaction, Information Economic Man fol-
lows the five basic rules below.
1) Active Cooperative Principle
Information Economic Man has obvious pro-social
characteristics and obeys the organizational rules and
regulations naturally showing active cooperative aware-
ness in economic activities.
2) Rational and Social Principle
Economic agents and economic organizations are free
to choose each other. They can decide to cooperate or not.
Choosing not to cooperate means to withdraw the or-
ganization. Once an economic agent decides to join a
certain organization, he will cooperate positively in that
3) Information Field Principle
Information Economic Man keeps sending cooperation
messages to the environment around, this is vector in-
formation whose size is capital amount information, re-
flecting the cooperative ability of individuals. Its direc-
tion is value orientation information, reflecting the de-
gree of differences and similarities of individual behavior
standards and organizational and social rules and regula-
tions, and then self-centered information files are built up.
Information Economic Man in the meanwhile is in the
information field formed by other economic men and
4) Information Comparison Decision Principle
Information Economic Man selects action strategies by
collecting environmental information and his code of
conduct information (threshold information). Action
Strategies include cooperation and quitting.
5) Dynamic Adjustment and Stability Principle
During the process of information dynamic searching,
Information Economic Man will adjust his cooperative
threshold and search the area in order to guarantee the
uniqueness and existence of the solution. Meanwhile,
there is relay characteristic in information economic
man’s cooperative information threshold judgment and a
corresponding returning threshold to every action thresh-
old to ensure the stability of the system.
In terms of the basic principles above, we can build up
a mathematical model of economic organization based on
Information Economic Man Assumption.
4.2. The Mathematical Mode of Organizational
Information Field
In the space, between two economic organizations (or
economic men), there is an interactional information
field force, which is in direct proportion to the product of
their capital amount, in inverse proportion to the square
of their information distance, and is related to the differ-
ence of their value orientation. The nature of the force
also depends on the consistency of their value orientation.
If their value orientations are basically the same, they are
mutually attracted; if their value orientations are basi-
cally opposite, they are mutually exclusive. The mathe-
matical model is shown as below [29]:
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The Study of the Supply Chain Cooperation Mechanism Based on the “Information Economic Man Assumption” 423
Let us define the following notation: Q: capital of or-
ganization, q: capital of individual. Q and q relatively
stand for the capital amount of the organization and of
the individual. Their directions represent their value ori-
entation. The force of organization information field is
shown as below:
Fr (1)
In this equation, k is the information field constant and
depends on environment conditions, such as information
publishing and dissemination as well as environmental
interference with information. r is the information dis-
tance between the organization and economic man (r
reflects the variation of information transmission result-
ing from the change of location between organization
and individual), α is space angle between the organiza-
tion capital vector Q and the individual capital vector q,
0˚ α 180˚, r, a unit vector, is the direction of the field
force, which lay their force on the ligature between them.
The nature of r is determined by the relationship of the
space angle between Q and q. It means the sign bit of
determines the direction of r. When cos
positive, r points toward the opposite side, the field force
becomes attraction. When cos
is negative, r turns
backward the opposite side, the field force becomes re-
pulsive force. Figure 1 portrays several typical situations
of the space angle.
According to Equation (1) and Figure 1, when 0˚ α
< 90˚, F is positive (see Figures 1(a) and (b)), economic
organization and man attract each other, their direction
acts on the connection of the two vectors; when α = 90˚
(see Figure 1(c)), F = 0; when 90˚ < α 180˚ (see Fig-
ures 1(d) and (e)), F is negative, they face away from
each other, their direction also acts on the connection of
the two vectors.
This mode uses the Electrostatic Field Theory of Cou-
lomb for reference, but the biggest difference is the
multi-dimensional aspects of the individual and organi-
zation. The value orientation of different dimensions is
not only a favorable but also an unfavorable factor for
cooperation, and some value orientation is irrelevant to
the economic cooperation. For the convenience of the
analysis, this mode simplifies the value orientation of
Figure 1. Unit vector relation of value orientation between
economic organization and economic man.
every economic man and economic organization as a unit
vector, but the relationship between different economic
men and economic organizations can differ as to arbi-
trary space angle. cos
is a projection of the vector q
onto the vector Q, which describes similarities and dif-
ferences of value orientation between economic man and
the organization. Obviously, only when 0˚ α < 90˚ can
cooperation be accomplished.
It can be seen that there is not only mutual attraction
but also mutual exclusion between the organization and
individual. The actual result is that under other un-
changeable conditions, higher levels of convergence of
value orientation between parties will lead to more
teamwork while lower levels of convergence of value
orientation between parties will lead to less teamwork.
As the difference of value orientation reaches a certain
level, it will be difficult to achieve cooperation. Thus it
can be seen that organic coordination of capital factor, its
basic power of organization cooperation and the value
orientation difference of factor owners are a balancing
force in organization cooperation, which make the or-
ganization maintain a dynamic steady state, so that every
organization should have a suitable size.
Because of this balancing power, sufficient cohesive
force is needed to assure that an organization works
properly. In order to analyze this capability, we introduce
organization information field intensity E, which only
relates to capital Q and its location. Its direction is the
value orientation of the organization, capital vector Q,
which is expressed by unit vector rQ. E can then be writ-
ten as follows:
r (2)
Organization information field intensity represents a
measure of cooperation information capability sent to all
nodes around the organization. Equation (2) indicates
that only if the organization has enough capital can it
construct cooperation information field and attract more
partners to join in. When economic man enters the scope
of organization information field, he will be affected by
cooperation information field E and get cooperation in-
formation about the capital and value orientation. If the
level of information exceeds the defined threshold, eco-
nomic man will try more to communicate, i.e. informa-
tion distance r in Equations (1) and (2) is reduced to in-
crease the field power and field intensity. If field power
exceeds cooperation threshold, substantial cooperation
will happen.
5. Analysis of Organizational Information
Field Mode of Supply Chain Cooperation
The fundamental assumption of the Information Eco-
nomic Man is that an individual actively seeks coopera-
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The Study of the Supply Chain Cooperation Mechanism Based on the “Information Economic Man Assumption”
tion with other individuals and organizations, and selec-
tively cooperates in terms of their capital amount and
value orientation information. Cooperative individuals
make up an organization, the capital amount and value
orientation information comprehensively reflects the re-
lated information of all the cooperators. In an organiza-
tion, it’s impossible for individuals’ capital amount and
value orientation to be exactly homogenous, so the effect
of every individual on the organization is different, and
there is also a great difference between individuals in
cooperation. Therefore, it’s necessary to firstly build up
the enterprise internal organizational information field
mode, then confirm the capital vectors of business or-
ganizations according to their different features, which
can establish the foundation for the research of supply
chain cooperation.
5.1. The Information Field Structural Mode of
General Economic Organizations
According to the degree of cooperation between indi-
viduals in the organization, it is considered that economic
organization is layered consisting of the core layer, mid-
dle layer and peripheral layer using the Organizational
Information Field Mode. Figure 2 is Organization Struc-
ture and its Information Field [29].
1) The Core Layer of the Organization
The core layer of the organization consists of closely
cooperative individuals who have exactly the same value
orientation and enough capital amounts. Alternatively,
we may say, the core layer consists of the individuals
who totally agree with the organization’s values. For
instance, the initiator of an organization is often the ele-
mentary member of the core layer. The core layer sets the
task, goal and confirms the value orientation. Meanwhile,
its capital amount basically determines the range of ac-
tion of the Information Field.
It’s certain that there may be tiny differences in value
orientation among actual members of the core layer. The
information distance r between members is negligible for
Figure 2. Organization structure and its information field.
the closeness of the structure because they are closely
related. According to the definition of the Organizational
Information Field as well as the Analytic Geometry
Vector Projection Theorem, the conclusion can be de-
duced by Equation (1) (the deduction is shown as Ap-
pendix A). The capital vector of the core layer Qc can be
arrived at by adding together all the members’ capital
vectors qci. That is:
As Equation (3) shows, the closer the value orienta-
tions of core layer members are, the more efficient the
collection of the capital will be. Otherwise, it will result
in the reduction of the actual capital amount and the dif-
ficulties in forming the close core layer. It will even in-
fluence the stability of the organizational operation. In
spite of the effect exerted by the middle layer and pe-
ripheral layer, it’s difficult to accurately calculate the
limiting influence of this effect. Thus, the capital vector
Qc of the organizational core layer approximately repre-
sents the enterprise capital vector which can be calcu-
lated using Equation (3).
2) The Middle Layer of the Organization
The middle layer is made up of lots of individuals
whose value orientation is close to that of the organiza-
tion. These individuals have a certain amount of capital
that is needed to implement the organizational function.
For instance, the individuals who join in the economic
organization by employment contract are often the main
members of the middle layer. They are the backbone of
the organization and the main function is implemented in
this layer.
Under many circumstances, it’s not enough to achieve
organizational goal only depending on the core layer. It
needs the joint effort of lots of cooperators. With many
participants in an organization, it’s impractical to require
the value orientation of all the participants to be the same
as the organization’s value orientation. Therefore, the
individuals who have a similar value orientation to the
organization are attracted by the core layer to form the
middle layer. Obliviously, the individual capital amount
and the conformance of their value orientation to that of
the organization determine how individuals and organi-
zations cooperate. The larger the individual capital
amount is, the closer its value orientation is to that of the
organization and the cooperation force is also stronger.
The closer their cooperation is, the closer the individuals’
location to the core layer will be. Then the smaller the
numerical value of r in Equation (1) will be. Otherwise,
the individual will be further away from the core layer.
In the middle layer, a reasonable management mecha-
nism can provide convenient communication of informa-
tion between neighboring individuals. Meaning, the
Copyright © 2013 SciRes. AJIBM
The Study of the Supply Chain Cooperation Mechanism Based on the “Information Economic Man Assumption” 425
shorter the information distance r is, the stronger the co-
operation of the inner organization will be. The strength-
ening of information communication makes the organi-
zation more flexible in adjusting assignments and adapt-
ing to changes in the external environment. The middle
layer will reinforce the information field force and
enlarge the influence of the organization. However, the
influence that can not be increased is limited for the dif-
ference between the value orientation of the middle layer
and that of the organization. However, there are value
orientation differences between the middle layer and the
organization, the influence of the latter on the former is
limited. A stable middle layer is the basic guarantee of
the organizational function. Thus, the formation of a sta-
ble middle layer is the basic requirement for the informa-
tion field force intensity. That is, in the Equation (2),
when r reaches the periphery of the middle layer, the
field intensity E still has enough strength and clear direc-
3) The Peripheral Layer of the Organization
The peripheral layer consists of individuals and other
economic organizations whose value orientations are
different from that of the organization and which have
certain complementary interest. Between individuals and
organization, there is a loose and uncertain cooperation
relationship. For instance, economic organizations have
long-term, short-term, or even one-off cooperation with
other individuals and organizations by various contracts.
The cause for the generation of the peripheral layer is
that with the expansion of the organization, the major
middle layer will create more administrative levels,
which lengthen the overall path of information transmis-
sion. So the increase of r will definitely decrease the in-
tensity and strength of the information field. Therefore,
due to the different managements of middle layers and
the unequal capital of various core layers, the organiza-
tion has a reasonable boundary. But besides the middle
layer, the organization still has the need to cooperate and
communicate with other individuals and organizations.
That is the way to form the peripheral layer where with
the increase of the information distance r, the intensity of
the organization E will be weakened and its direction
will be blurred too. As a result, there will be more diffi-
culties for the cooperation. However, the existence of the
peripheral layer, where the cooperation is started, defi-
nitely expresses the openness and cooperation of the
economic organizations. Therefore, a successful eco-
nomic organization must try to keep enough intensity of
the cooperation information field in the peripheral layer.
Apparently, this is just a generalized structure mode.
The practical structure mode of the economic organiza-
tion has different kinds of variants. For example, there
are great differences in the structural proportions of the
core layers, middle layers and the peripheral layers of
different enterprises. The market, as a loose economic
cooperation organization, can be considered as an organ-
izational form only with the peripheral layer.
5.2. Analysis of Organization Information Field
Structure Mode in Supply Chain
The supply chain cooperation mechanism focuses on the
cooperation relationship among enterprises. Thus, the
basic unit individual in the analysis can be turned into
enterprise. To simplify the problem, we can assume an
enterprise is an inseparable basic unit that has a certain
amount of capital and clear value orientation. Under
these similar circumstances, the capital vector Qc in
Equation (3) can be used to describe the basic features of
an enterprise.
With the development of enterprises, supply chain co-
operation mode is gradually improved. In the early de-
velopment of modern enterprise, the rapid rise of many
enterprises was accomplished by the cooperation be-
tween commercial capital and handwork workshop. That
was the first outsourcing business. Essentially, this was
the rudiment of supply chain cooperation. The coopera-
tion scale was small in this period and there were only
core layer and peripheral layer in this early supply chain
organizational structure. That is, commercial capital is in
the core layer and the handwork workshop is in the pe-
ripheral layer. Though the organizational function is fo-
cused on the peripheral layer, the scale of the organiza-
tion is not large. In this case, the core layer can still co-
ordinate effectively to ensure the organizational function.
However, after the expansion of the organization, the
information that needs the coordination of both the core
layer and peripheral layer is rapidly increased, which
results in the efficiency lowering. Therefore, after having
sufficient capital, the core layer will establish a strong
and tight-knit middle layer to replace the original periph-
eral layer’s function, which forms vertical integration of
the enterprise development. In the middle layer, the
strengthening of the layer’s coordination capability and
the obvious convergence of the value orientation make
information transmission more efficient. When the or-
ganization goes through a second expansion, some prob-
lems of information coordination will arise, and as a re-
sult, the second outsourcing phenomenon comes into
being. Under this circumstance, some of the functions
previously implemented in the middle layer are shifted to
the peripheral layer. Accordingly, enterprises improve
their own market competitiveness and organization op-
erational efficiency by stripping-out non-core business. It
is along with the popularization of the second outsourc-
ing that the modern supply chain cooperation mode be-
comes the dominant mode of economic cooperation. At
Copyright © 2013 SciRes. AJIBM
The Study of the Supply Chain Cooperation Mechanism Based on the “Information Economic Man Assumption”
present, the enterprise organizational mode is going
through a climate where integration is transforming to
strategic alliance.
Outsourcing can be categorized as standardized ho-
mogeneous product or service provided by market trade,
and professional product or service supplied by sub-con-
tractors. The supply chain structure corresponding to
these two outsourcing is mainly divided into stable sup-
ply chain and dynamic supply chain. A stable supply
chain with strong stability is based on a stable and uni-
tary market demand while a dynamic supply chain is
based on relatively frequent changes and complicated
market demands [30].
The cooperative relationship of a dynamic supply
chain is relatively loose and not that stable. Its coopera-
tive relationship is more like a market trade relationship,
whose content is parallel to that of standardized, homo-
geneous products and services. The organization struc-
ture of the dynamic supply chain is a loose structure pat-
tern which only has a core layer and a peripheral layer.
The core enterprises of the dynamic supply chain are
surely in the core layer of the supply chain while other,
related cooperative enterprises are in the peripheral layer.
In this kind of cooperative relationship, the information
distance between those enterprises is relatively longer
and it’s not easy to cooperate. Furthermore, because the
contact among the enterprises is not close enough, the
main factor which influences the cooperation between
enterprises is the coordinate situation of the capital and
ability between them. But if there isn’t any stringent re-
quirement of a similar corporation value and as long as
both parties can comply with the basic regulations of fair
trade, they can attain a dynamic cooperation relationship.
The dynamic supply chain is able to react to market de-
mand in a timely manner. Its cooperative relationship is
relatively simple and the construction of the supply chain
is comparatively easy. However, the dynamic supply
chain can not guarantee the effectiveness of the supply
chain. When the quality and cost-control requirement of
the product is high, a stable supply chain tends to be
Stable supply chain cooperation is relatively close and
the cooperation relationship is closer to a vertically inte-
grated relationship. The cooperation is about professional
products and service. The organizational structure of a
stable supply chain which lies in the middle layer of sup-
ply chain organization with downstream cooperative en-
terprises which cooperate with core enterprises, is a close
cooperation mode that consists of the core layer and the
middle layer. Because of the short information distance
and the close association between core enterprises and
cooperative enterprises, the matching degree of capital
endowment is not the only factor that influences the co-
operation. There is a high standard for the similarities
and differences in value orientation between enterprises.
In long-term cooperation, instead of only following the
simple principle of fair trade, it’s essential to set up the
development blueprint and cultivate supply chain culture
shared by the partners. Only in this way can we structure
a stable supply chain and ensure its validity. Thus, in
order to stabilize the supply chain, there is a high stan-
dard for the cooperation relationship. In the supply chain
of a basic industry such as the petrochemical industry or
the agricultural industry, to ensure the quality of the
product and control the cost of production, it’s necessary
to establish a stable supply chain and ensure a stable co-
operation relationship.
6. Conclusions
Supply chain cooperation, one of the categories of the
economic organization cooperation relationship, is an
extensive cooperation interval between market coopera-
tion and enterprise vertical integration cooperation. The
dynamic supply chain and the stable supply chain ana-
lyzed in this thesis are just two typical representatives of
the extensive cooperation interval.
As we can see in organizational information field
mode, one of the restraining factors in the development
of economic cooperation is the existence of information
distance. For greater cooperation benefit, it’s necessary
to constantly improve the key factors that influence the
economic cooperation. There are three main aspects:
1) Social Information Transmission Condition
The social information transmission condition reflects
the influence of the social information sharing mecha-
nism and technological means on cooperation efficiency.
If the social information sharing mechanism is improved,
the technology will be more advanced and the cost will
be lower. That means the information filed constant K is
bigger so the cooperation efficiency is higher too. Fur-
thermore, when the information field constant K is bigger,
it can offset the effect of the information distance r, so
that the economic cooperation can be achieved in a wider
space. There is often a good information sharing mecha-
nism in the stable supply chain, which also proves the
significance in this condition.
2) The Capital Amount of the Cooperation Participants
The capital amount of each cooperation participant re-
flects the competence of the individual. Obviously,
higher competence can make it easier to achieve coop-
eration. However, instead of equivalent competence, the
organic coordination of every participant’s cooperation
ability is required. It should be pointed out that if we
analyze the cooperation relationship in terms of the capi-
tal amount, only those enterprises with equivalent or ap-
proximately equivalent capital amount can have a rela-
tively fair cooperation relationship. If one’s capital
amount is much stronger than the other enterprise’s, it’s
Copyright © 2013 SciRes. AJIBM
The Study of the Supply Chain Cooperation Mechanism Based on the “Information Economic Man Assumption” 427
also difficult to guarantee the fairness of the cooperation.
Without fairness, it’s very difficult to maintain the long-
term stability of the cooperation relationship. However,
in reality, this kind of supply chain cooperation relation-
ship has both successful and unsuccessful cases, which
shows that it’s not comprehensive enough to analyze the
supply chain cooperation mechanism only in terms of the
capital amount.
3) The Consistency of the Cooperation Participants’
Value Orientations
This consistency reflects the participants’ attitude to-
wards the social norm. If the participants have exactly
the same value orientation, they will achieve the highest
cooperation efficiency. But in practice, it’s hard for the
individuals to have the same code of conduct even
though they are from the same social environment. There
must be some differences in their value orientations.
Thus, there will be a greater difference in value orienta-
tion among individuals from different social environ-
ments, which will definitely have an effect on the coop-
eration efficiency. Therefore, internally, every organiza-
tion will form the uniform code of conduct and coordi-
nate the cooperation efficiency of the members by estab-
lishing its organizational and enterprise culture. Exter-
nally, they will have cooperation needs and the widely-
acknowledged social norm will become the guarantee for
the increase in cooperation efficiency. In the stable sup-
ply chain, the construction of culture has become an im-
portant means of maintaining the stable cooperation of
this chain, which has become more and more obvious,
especially in such times of diversified supply chain capi-
tal structure.
The Information Field Force F is the comprehensive
manifestation of all factors related to cooperation. As
long as the numerical value of F exceeds the cooperative
threshold of the specific items, the cooperation can be
achieved, and a greater F implies a more steady coopera-
It should be noticed that in terms of current technology,
only some proper improvement rather than radical solu-
tions can be achieved. For example, we can only offer
necessary information at a reasonable cost. Therefore, we
need to promote the construction of social culture and
ethics, not only the construction of the enterprise and
organizational culture, but also of the social core value
system, then a sense of identity can be increased among
the members of the organization or even the members
among the whole society, which can help establish the
high efficiency of the cooperation mechanism and im-
prove the sound development of the economy. Meantime,
only after an advanced social regulation is widely ac-
cepted by the society can it play its due role. Thus, a
good social regulation and civil social regulations need
careful maintenance.
7. Acknowledgements
The authors gratefully acknowledge the following indi-
viduals for their assistance with translation and proof-
reading: (UK) David Jackson (Department of Economic
and Management, Huizhou University), Ling Zhang,
(Department of Economic and Management, Huizhou
University), Bei Chen (Department of Economic and
Management, Huizhou University), Xiling Cai (Depart-
ment of Foreign Language, Huizhou University), Jiana
Weng (Department of Foreign Language, Huizhou Uni-
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Appendix A. Calculate Capital Vector of
Economic Organization Core Layer 00nc
, and their direction, which can be presented
by rc0, are in the same line. Equation (A1) can be written
Suppose that there are n economic men in economic or-
ganization core layer and the capital vectors are
12 . And there is an economic man whose
capital vector is q0, and its angles with 12 is
10 200
cc cn
qq q
cc cn
qq q
. The distance between q0 and numbers of
economic organization core layer are 10200 . The
information field power which can be perceived by eco-
nomic man q0 is
rr r
0110 2200
cos coscos
ccccn n
10 20
10 20
01010 2020
10 20
cos cos
cos cos
qq qq
kq αα
 
 
Argument of Equation (A2) is summation of projec-
tion of 12 in rc0. According projection
theorem, the projection of finite number of sum of vec-
tors equals the sum of the projection of every vector [31],
so that the argument of Equation (A2) can be replaced by
the projection of Qc in rc0. The Equation (A2) is written
cc cn
qq q
cos cos
cC ccc
 
rr (A3)
where 0 is the angle between Qc and q0, Qc is
capital vector sum of numbers in economic organization
core layer. That is
cos c
q (A4)
Ignoring information distance of numbers of economic
organization core layer, we can get that 10 20