A supply chain coordination mechanism with cost sharing of corporate social responsibility

Abstract

The competition of modern enterprises has shifted from brand competition among enterprises of the past to that of supply chains; and considering corporate social responsibility (CSR) within supply chain management has become an inevitable requirement for improving the competitiveness of enterprises and conforms to the trend of standardization of social responsibility guidelines. This paper deals with channel coordination and decision-making in a CSR supply chain that is comprised of a dominant retailer and n homogeneous suppliers. The Stackelberg game is employed to analyze the optimal decision-making of this supply chain under either decentralized or centralized decision-making processes. After that, the thought and method of super conflict equilibrium are used to design the coordination decision-making mechanism of this supply chain based on the cost sharing of CSR to solve channel conflict and to optimize the decision. The results show that the proposed mechanism based on the cost sharing of CSR is better than those with only either the retailer or the suppliers being CSR; and it can well describe the relationship between the retailer and the suppliers, and increase the eagerness of the retailer and suppliers to carry out their CSR under various circumstances without having the profits adversely affected. As a matter of fact, this mechanism maximizes the profits of the entire supply chain system and also enhances the competitiveness of the chain.