Interplay Of CSR Strategies In The Supply Chain Under Asymmetric Quality Information

In recent years,more and more companies have recognized the business value of CSR and have been enhancing their corporate value by actively investing in CSR or jointly participating in CSR activities with upstream and downstream companies.However,despite the prevalence of CSR investment in business practice,literature reviews indicate that it is still an unclear issue how to comprehensively understand the role of CSR in supply chain operations and management.Most of the CSR operational literature identifies a strategic role for CSR(under the condition that consumers respond positively to CSR)to enhance market demand and thus corporate profitability,a minority of the literature reveals the role of CSR in signaling product information in supply chain.But the two types of CSR roles are currently studied separately,and there is little literature that places these two roles in a unified operational framework.Noting that information asymmetry often makes CSR investment decisions difficult for nodal firms,and that CSR burden sharing may weaken the motivation of nodal firms to invest in CSR,the above literature does not answer the question of how CSR can simultaneously enhance market demand and send quality signals during the interplay of nodal firms’ CSR strategies.To fill the gap,this paper constructs a signaling game model considering CSR investment under quality information asymmetry.By introducing consumers CSR preferences and nesting a CSR decision stage before the product transaction stage of manufacturers and retailers,we describe the strategic roles of CSR behaviors in the operation process.Specifically,the strategic role of CSR and its applicability conditions are studied in the case of symmetric and asymmetric information on product quality by constructing three models,including a two-level supply chain without CSR preference,a two-level supply chain with CSR preference,and a three-level supply chain with CSR preference,under the scenario that all members of the supply chain are invested in CSR,portraying the equilibrium CSR strategies of each node firm,revealing the strategic interplay between CSR strategies of each firm and the influence of exogenous factors on the strategic interplay of CSR strategies.The main findings of this paper are as follows:(1)In the two-level supply chain where consumers do not have CSR preferences,the pooling equilibrium reveals that high-quality manufacturers in asymmetric information have motivation to reveal their type compared to symmetric information,while low-quality manufacturers lack such motivation.The separation equilibrium reveals that manufacturers can signal quality information to retailers and consumers via moderate levels of CSR behavior(an information cost),while retailers have no motivation to invest in CSR because consumers do not have CSR preferences,and thus there is no interplay between manufacturers’ and retailers’ CSR strategies.In this case,the CSR behavior in the model only plays the role of transmitting quality signals.(2)In the two-level supply chain where consumers have CSR preferences,the model have separation equilibria,and the only and most efficient separation equilibrium(which is also a Pareto equilibrium)exists under the rule of "intuitive criteria";CSR plays both the role of signaling quality information(manufacturer’s investment CSR)and enhancing market demand(manufacturer’s and retailer’s investment CSR).The interactive relationship between the CSR strategies of manufacturers and retailers depends on the CSR preference attributes of consumers: When consumers have CSR preferences,regardless of the symmetry of quality information,the manufacturer’s CSR strategy has an incentive effect on the retailer’s CSR strategy,and the intensity of the incentive is proportional to the consumer’s CSR preference coefficient;when consumers do not have CSR preferences,regardless of the symmetry of quality information,the above CSR incentive function of manufacturers will be invalid.(3)In the three-level supply chain where consumers have CSR preferences,the model have separation equilibria,and the only and most efficient separation equilibrium(which is also a Pareto equilibrium)exists under the rule of "intuitive criteria";CSR plays both the role of signaling quality information(manufacturer’s investment CSR)and enhancing market demand(supplier’s,manufacturer’s and retailer’s investment CSR).CSR strategies of manufacturers(as the signal sender)has an incentive effect on CSR strategies of suppliers and retailers(as the signal receiver),and there is a mutual incentive effect between the CSR strategies of retailers and suppliers.The two incentive effects are unrelated to the supply chain information structure,unrelated to the real quality information of manufacturers,related to the quality information shown by manufacturers,proportional to the level of consumer CSR preference,and inversely proportional to the marginal cost and utility of the product of CSR.Given the consumer preference level,the incentive intensity of manufacturers on suppliers or retailers is greater than the incentive intensity between the latter.When consumers do not have a preference for CSR,regardless of the symmetry of quality information,all the above CSR incentive effects will be invalid.These results will contribute to not only extending the theory and method of information sharing and CSR operation in supply chains,but also establishing a logical and consistent foundation for to understand the relationship among stakeholder response,CSR strategy and supply chain performance in supply chains.