Decision Models and Governance Mechanisms Considering Corporate Social Irresponsibility in Supply Chains

Decision Models and Governance Mechanisms Considering Corporate Social Irresponsibility in Supply Chains

Bin Liu (Shanghai Maritime University, China), Pepei Ying (Shanghai Maritime University, China) and Lin Peng (Shanghai Maritime University, China)
Copyright: © 2018 |Pages: 18
DOI: 10.4018/978-1-5225-3537-9.ch008

Abstract

This chapter describes corporate social irresponsibility (CSI) with a global variable, and supposes it has a negative influence on market demand to set up a decision model in supply chain for the joint effect of price and CSI on demand. Analyzing manufacturers' decisions on CSI under two supply chain structure settings including single-channel supply chain and competitive supply chain, the authors hope to design governance mechanisms to restrain the CSI performance of the manufacturers so as to provide a theoretic reference to the better fulfillment of sustainable development and social responsibility. Moreover, this chapter makes a simple extension on the asymmetry initial base demand, and the result is quite different from the symmetry initial base demand. It is found that an asymmetric CSI strategy can achieve equilibrium. A suggestion in this chapter is to intensify the competition in supply chain by supporting smaller enterprises and preventing complete monopoly.
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Background

In terms of corporate sustainable development (CSD), many scholars have discussed the relationship with CSR. Hu (2004) illuminated that CSR is an ethical basis for CSD and has practical significance to CSD. Xin and Liao (2013) argued that CSR has driving and restrictive effects on CSD. If an enterprise does not undertake the social responsibility, it can only gain temporary profit and achieve short-term development, but cannot develop sustainably. Hediger (2010) defined CSR as an action contributing to corporate profit maximization and social improvement, and pointed out that CSD requires corporate profit maximization, which shouldn’t decrease with time. He also pointed out that if an enterprise undertakes the social responsibility, it could accumulate reputation and capital to enhance its values. Of course, some other scholars have confirmed that a certain positive correlation between CSR and corporate performance is conducive to its sustainable development. Sun and Li (2012) analyzed the 2011 report on CSR and IPO audit, concluding that for sustainable development, an enterprise should not only pay attention to economic benefits, but also actively undertake social responsibility. Wang and Hou (2009) confirmed that there is a positive correlation between performance of CSR and CSD. Carrasco and Buendía (2013) confirmed that if an enterprise integrates social responsibility into its culture, it could make self-innovation and internationalization a reality while implementing cultural innovation, so as to increase returns and promote social sustainable development. Wang and Han (2016) confirmed that CSR and internal control quality are significantly positively correlated with the level of CSD, and that a benign interaction between these two factors has a synergistic effect on CSD. All these researches directly reveal the positive correlation between CSR and CSD, while very few involve the influence of CSI on CSD.

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