CSR Operations In Tow-level Supply Chains:Mutual Incentive, Allocation And Cooperation

Based on Baron’s strategic CSR view, we consider a two-echelon supply chain consisting of an upstream manufacturer and a downstream retailer, under the condition that consumers positively respond to CSR activities conducted by supply chain members and CSR activities are conducted prior to the intermediate product trading in the supply chain, we build and solve two three-stage dynamic game models on the operations of the supply chain corresponding to two intermediate product trading venues(i.e. Via a competitive intermediate product market and a bilateral wholesale price contract). The results obtained by comparing the corresponding equilibriums show that(1) the bilateral contract trading is necessary for the manufacturer to conduct positive CSR activities and(2) a higher enough level of the manufacturer’s CSR conducting efficiency is sufficient for supply chain members to achieve higher CSR performance and economic performance via a bilateral contact venue for trading the intermediate product.On the basis of the above conclusions, this paper has a more detailed study on the bilateral wholesale price contract and model three different CSR allocations by examining whether the manufacturer or the retailer is required to conduct CSR activities. The comparisons among the equilibrium economic and social performances under those three different CSR allocations show that(1) consumers’ positive responses to supply chain CSR activities make supply chain members’ CSR choices are strategically complementary, leading to mutual incentives on their CSR behaviors, and(2)regardless of the initial CSR allocation in a supply chain, both the manufacturer and retailer will choose to be responsible for its own CSR activities in order to obtain higher economic and social performance in equilibrium.Furthermore, this paper uses the Nash bargaining model to describe cooperative CSR decision making and wholesale price contract negotiation. The corresponding Nash bargaining solution shows that since this cooperative operations can overcome the problem of double marginalization in the ex post product-transaction stage and the lack of CSR motivation in the ex ante CSR strategic interaction stage under non-cooperative operations, the cooperation can further enhance both supply chain members’ individual and the supply chain’s social and economic performances. Because of the mutual incentive mechanism between node enterprises, the cooperation of the node enterprises in bilateral trade of intermediate products stage will lead to cooperation in the CSR behavior stage. This result reveals that compared with the CSR behavior stage, the cooperation in the in bilateral trade of intermediate products stage has more incentive effect in the supply chain.Conditioned on consumers’ positive responses to supply chain CSR activities, these results, on the one hand, provide a theoretical response to the debate on which member in a supply chain should be responsible for CSR activities, and on the other hand, point out that the focus in managing CSR interactions in a supply chain is not on how allocate CSR among supply chain members, but on whether to adopt a cooperative way to operate the supply chain.