Abstract
In an era of supply chain turbulence characterized by demand instability and intensified market competition, incumbent retailers face significant threats from the potential entry of rival supply chains. This paper investigates how an incumbent retailer can leverage strategic information design as a critical capability to survive such competitive disruptions and maximize profitability. Using a Bayesian persuasion framework, we analyze the interaction between the incumbent’s disclosure policies and a potential entrant’s decisions under demand uncertainty. We find that to navigate this instability, the incumbent can dynamically adopt three strategies—full disclosure, exaggeration, or downplaying—depending on the entrant’s cost structure. Specifically, exaggeration serves as a resilience strategy against moderately low cost entrants, while downplaying effectively deters moderately high cost entrants. Interestingly, we observe that information accuracy fluctuates non-monotonically with entry costs, highlighting the complex trade-off between transparency and security. Our results demonstrate that strategic information design consistently benefits incumbent firms by reducing internal supply chain conflicts and stabilizing market position against entrants. These findings offer managerial guidance on utilizing information disclosure not just as a routine operation, but as a strategic tool for mitigating entry risks and enhancing supply chain adaptability in volatile markets.