Social responsibility allocation in two-echelon supply chains: Insights from wholesale price contracts

Debing Ni, Kevin W. Li and Xiaowo Tang

European Journal of Operational Research, 2010, vol. 207, issue 3, 1269-1279

Abstract: Corporate social responsibility (CSR) is considered in a two-echelon supply chain consisting of an upstream supplier and a downstream firm that are bound by a wholesale price contract. CSR performance (the outcome of CSR conduct) of the whole supply chain is gauged by a global variable and the associated cost of achieving this CSR performance is only incurred by the supplier with an expectation of being shared with the downstream firm via the wholesale price contract. As such, the key issue is to determine who should be allocated as the responsibility holder with the right of offering the contract and how this right should be appropriately restricted. Game-theoretical analyses are carried out on six games, resulting from different interaction schemes between the supplier and the firm, to derive their corresponding equilibriums. Comparative institutional analyses are then conducted to determine the optimal social responsibility allocation based on both economic and CSR performance criteria. Main results are furnished in a series of propositions and their implications to the real-world business practice are discussed. The key findings are threefold: under the current model settings: (1) the optimal allocation scheme is to assign the supplier as the responsibility holder with appropriate restrictions on the corresponding rights to determine the wholesale price; (2) inherent conflict exists between the economic and CSR performance criteria and, hence, the two maxima cannot be achieved simultaneously; and (3) although integrative channel profit is not attainable, the system-wide profit will be improved by implementing optimal social responsibility allocation schemes.

Keywords: Supply; chain; management; Corporate; social; responsibility; Wholesale; price; contracts; Equilibrium (search for similar items in EconPapers)
Date: 2010
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (66)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0377-2217(10)00462-5
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:ejores:v:207:y:2010:i:3:p:1269-1279

Access Statistics for this article

European Journal of Operational Research is currently edited by Roman Slowinski, Jesus Artalejo, Jean-Charles. Billaut, Robert Dyson and Lorenzo Peccati

More articles in European Journal of Operational Research from Elsevier
Bibliographic data for series maintained by Catherine Liu ().