Title: A game theory analysis of trust and social capital in sustainable supply chain management

We consider the motivations of a customer-facing focal firm in a supply network regarding a choice between options for production methods and project direction. One option is purely economic, but with a negative social impact, while the other is a socially responsible alternative that entails a lower rate of economic return. In our game-theoretic analysis, the focal firm faces twin pressures: external pressure from its customers (who favour the prosocial option), and internal pressure from its network partners. After choosing the option for the project direction, all of the partners exert value-creating efforts: hence multi-sided moral hazard problems may exist in the form of effort-shirking. Social capital and trust within the network is enhanced by the choice of the social option, which mitigates the effort-shirking problem. Our analysis demonstrates that customer pressure and network social capital combine, and are substitutes, in inducing the focal firm to choose the pro-social option. Track: Operations, logistics and supply management.