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doi: 10.3934/jimo.2022052
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Research on corporate social responsibility and product quality in an outsourcing supply chain

1. 

School of Economics, School of Economics, Jiujiang University, Jiujiang 332005, China

2. 

School of Management and Economics, School of Management and Economics, Hefei University of Technology, HeFei 230009, China

3. 

School of Marketing and Logistics Management, Nanjing University of Finance and Economics, Nanjing 210023, China

*Corresponding author: Fan Jianchang

Received  November 2020 Revised  September 2021 Early access April 2022

In a supply chain with product outsourcing, it is crucial to identify which firm implements corporate social responsibility (CSR) leads to a higher CSR effort level, a higher product quality level, a higher quantity of outsourced products, and higher profits for supply chain members. In response to this question, we consider a decentralized supply chain with an upstream contract manufacturer (CM) and a downstream original equipment manufacturer (OEM). In this relationship, the downstream OEM outsources the product to the upstream CM and determines the quantity, while the upstream CM produces for the downstream OEM and determines the product quality and the wholesale price. Based on the scenario that each supply chain member can respectively implement the CSR effort (i.e., the CM model and the OEM model), we first investigate the impacts of the CSR demand-sensitivity coefficient, the CSR cost-reducing efficiency, and the CSR effort investment efficiency on the operational decisions and on the profits for supply chain members. Second, we compare the equilibrium results between the CM model and the OEM model. Finally, we study supply chain coordination. We find that (1) an increase in the CSR demand-sensitivity coefficient (the CSR cost-reducing efficiency and the CSR effort investment efficiency) is beneficial to the CSR effort level, the product quality level, the quantity of outsourced products, and the profitability for each supply chain member; (2) the CSR effort level is higher in the CM model than that in the OEM model, which in turn leads to a higher product quality level, a higher quantity of outsourced products, and a higher profitability of supply chain members; and (3) the proposed schemes consisting of quantity discount contracts, CSR effort investment cost sharing contracts, and quality investment cost sharing contracts can effectively coordinate the supply chain.

Citation: Hong Dingjun, Fu Hong, Fan Jianchang. Research on corporate social responsibility and product quality in an outsourcing supply chain. Journal of Industrial and Management Optimization, doi: 10.3934/jimo.2022052
References:
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F. BernsteinA. G. Kök and A. Meca, Cooperation in assembly systems: The role of knowledge sharing networks, European Journal of Operational Research, 240 (2015), 160-171.  doi: 10.1016/j.ejor.2014.06.013.

[2]

T. ChakrabortyS. S. Chauhan and M. Ouhimmou, Cost-sharing mechanism for product quality improvement in a supply chain under competition, International Journal of Production Economics, 208 (2019), 566-587.  doi: 10.1016/j.ijpe.2018.12.015.

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J. ChenL. Liang and F. Yang, Cooperative quality investment in outsourcing, International Journal of Production Economics, 162 (2015), 174-191.  doi: 10.1016/j.ijpe.2015.01.019.

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J. ChenL. LiangD. Yao and S. Sun, Price and quality decisions in dual-channel supply chains, European Journal of Operational Research, 259 (2017), 935-948.  doi: 10.1016/j.ejor.2016.11.016.

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Z. Chong, Apple supplier guilty of unsafe work conditions, report finds, CNET, January 18, (2018), https://www.cnet.com/news/china-labor-watch-finds-harsh-work-conditions-at-apple-supplier/.

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F. El Ouardighi, Supply quality management with optimal wholesale price and revenue sharing contracts: A two-stage game approach, International Journal of Production Economics, 156 (2014), 260-268.  doi: 10.1016/j.ijpe.2014.06.006.

[7]

J. FanD. Ni and X. Tang, Product quality choice in two-echelon supply chains under post-sale liability: Insights from wholesale price contracts, International Journal of Production Research, 55 (2017), 2556-2574.  doi: 10.1080/00207543.2016.1240382.

[8]

J. FanD. Ni and X. Fang, Liability cost sharing, product quality choice, and coordination in two echelon supply chains, European Journal of Operational Research, 284 (2020), 514-537.  doi: 10.1016/j.ejor.2020.01.003.

[9]

H. Fu, M. Liu and B. Chen, Supplier's investment in manufacturer's quality improvement with equity holding, Journal of Industrial & Management Optimization, 17(2) (2021), 649–668. doi: 10.3934/jimo.2019127.

[10]

F. GangiD. SalernoA. Meles and L. M. Daniele, Do Corporate social responsibility and corporate governance influence intellectual capital efficiency?, Sustainability, 11 (2019), 1899.  doi: 10.3390/su11071899.

[11]

Z. GeQ. Hu and Y. Xia, Firms' R & D cooperation behavior in a supply Chain, Production and Operations Management, 23 (2014), 599-609.  doi: 10.1111/poms.12037.

[12]

S. Huang, H. Fu and Y. Ma, Coordinating a supply chain when manufacturer makes cost reduction investment in supplier, Discrete Dynamics in Nature and Society, (2016), 1–10. doi: 10.1155/2016/4762397.

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T. Iida, Coordination of cooperative cost-reduction efforts in a supply chain partnership, European Journal of Operational Research, 222 (2012), 180-190.  doi: 10.1016/j.ejor.2012.03.029.

[14]

J. R. Kroes and S. Ghosh, Outsourcing congruence with competitive priorities: Impact on supply chain and firm performance, Journal of operations management, 28 (2010), 124-143.  doi: 10.1016/j.jom.2009.09.004.

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[16]

Y. LiD. NiZ. Xiao and X. Tang, Signaling product quality information in supply chains via corporate social responsibility choices, Sustainability, 9 (2017), 2113.  doi: 10.3390/su9112113.

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J. LiF. Zhang and S. Sun, Building consumer-oriented CSR differentiation strategy, Sustainability, 11 (2019), 664.  doi: 10.3390/su11030664.

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P. MaH. Wang and J. Shang, Supply chain channel strategies with quality and marketing effort-dependent demand, International Journal of Production Economics, 144 (2013a), 572-581.  doi: 10.1016/j.ijpe.2013.04.020.

[19]

P. MaH. Wang and J. Shang, Contract design for two-stage supply chain coordination: Integrating manufacturer-quality and retailer-marketing efforts, International Journal of Production Economics, 146 (2013b), 745-755.  doi: 10.1016/j.ijpe.2013.09.004.

[20]

P. MaJ. Shang and H. Wang, Enhancing corporate social responsibility: Contract design under information asymmetry, Omega, 67 (2017), 19-30.  doi: 10.1016/j.omega.2016.03.004.

[21]

T. Maiti and B. C. Giri, Two-way product recovery in a closed-loop supply chain with variable markup under price and quality dependent demand, International Journal of Production Economics, 183 (2017), 259-272.  doi: 10.1016/j.ijpe.2016.09.025.

[22]

N. M. ModakN. Kazemi and L. E. Cárdenas-Barrón, Investigating structure of a two-echelon closed-loop supply chain using social work donation as a corporate social responsibility practice, International Journal of Production Economics, 207 (2019), 19-33.  doi: 10.1016/j.ijpe.2018.10.009.

[23]

D. Ni, K. W. Li and X. Tang, Social responsibility allocation in two-echelon supply chains: Insights from wholesale price contracts., European Journal of Operational Research, 207 (2010), 1269–1279. doi: 10.1016/j.ejor.2010.06.026.

[24]

S. A. Raza, Supply chain coordination under a revenue-sharing contract with corporate social responsibility and partial demand information, International Journal of Production Economics, 205 (2018), 1-14.  doi: 10.1016/j.ijpe.2018.08.023.

[25]

L. Tetrevova and M. Jelinkova, Municipal social responsibility of statutory cities in the Czech Republic, Sustainability, 11 (2019), 2308.  doi: 10.3390/su11082308.

[26]

Y. Tong and Y. Li, External intervention or internal coordination? Incentives to promote sustainable development through green supply chains, Sustainability, 10 (2018), 2857.  doi: 10.3390/su10082857.

[27]

L. Tobias, Apple and Foxconn: Sustainable labor is a must, GreenBiz, February, 16, (2012), https://www.greenbiz.com/blog/2012/02/16/apple-and-foxconn-sustainable-labor-must.

[28]

S. WangQ. Hu and W. Liu, Price and quality-based competition and channel structure with consumer loyalty, European Journal of Operational Research, 262 (2017), 563-574.  doi: 10.1016/j.ejor.2017.03.052.

[29]

J. Wang and H. Shin, The impact of contracts and competition on upstream innovation in a supply chain, Production and Operations Management, 24 (2015), 134-146.  doi: 10.1111/poms.12218.

[30]

T. XiaoY. Xia and G. P. Zhang, Strategic outsourcing decisions for manufacturers competing on product quality, IIE Transactions, 46 (2014), 313-329.  doi: 10.1080/0740817X.2012.761368.

[31]

X. Yan, An analysis of contract form for supply chains with quality improvement, International Transactions in Operational Research, 25 (2018), 1879-1906.  doi: 10.1111/itor.12266.

[32]

X. YanH. Zhao and K. Tang, Requirement or promise? An analysis of the first-mover advantage in quality contracting, Production and Operations Management, 24 (2015), 917-933.  doi: 10.1111/poms.12315.

[33]

Y. YanR. Zhao and Y. Lan, Moving sequence preference in coopetition outsourcing supply chain: Consensus or conflict, International Journal of Production Economics, 208 (2019), 221-240.  doi: 10.1016/j.ijpe.2018.11.020.

[34]

S. H. Yoo and T. Cheong, Quality improvement incentive strategies in a supply chain, Transportation Research Part E: Logistics and Transportation Review, 114 (2018), 331-342.  doi: 10.1016/j.tre.2018.01.005.

[35]

J. Yu and S. Ma, Impact of decision sequence of pricing and quality investment in decentralized assembly system, Journal of Manufacturing Systems, 32 (2013), 664-679.  doi: 10.1016/j.jmsy.2013.02.004.

[36]

J. ZhangQ. Cao and X. He, Contract and product quality in platform selling, European Journal of Operational Research, 272 (2019b), 928-944.  doi: 10.1016/j.ejor.2018.07.023.

[37]

H. Zhang and D. Hong, Manufacturer's R & D investment strategy and pricing decisions in a decentralized supply chain, Discrete Dynamics in Nature and Society, (2017a), 1–10. doi: 10.1155/2017/9879874.

[38]

H. Zhang and D. Hong, Supplier's joint investments in cost reduction and quality improvement in a decentralized Supply chain, Mathematical Problems in Engineering, (2017b), 1–10. doi: 10.1155/2017/4391475.

[39]

J. ZhangS. LiS. Zhang and R. Dai, Manufacturer encroachment with quality decision under asymmetric demand information, European Journal of Operational Research, 273 (2019a), 217-236.  doi: 10.1016/j.ejor.2018.08.002.

[40]

X. Zhao and R. Yin, Coordination of a socially responsible two-stage supply chain under price-dependent random demand, 4OR-A Quarterly Journal of Operations Research, 16(4) (2017), 379–400. doi: 10.1007/s10288-017-0368-9.

show all references

References:
[1]

F. BernsteinA. G. Kök and A. Meca, Cooperation in assembly systems: The role of knowledge sharing networks, European Journal of Operational Research, 240 (2015), 160-171.  doi: 10.1016/j.ejor.2014.06.013.

[2]

T. ChakrabortyS. S. Chauhan and M. Ouhimmou, Cost-sharing mechanism for product quality improvement in a supply chain under competition, International Journal of Production Economics, 208 (2019), 566-587.  doi: 10.1016/j.ijpe.2018.12.015.

[3]

J. ChenL. Liang and F. Yang, Cooperative quality investment in outsourcing, International Journal of Production Economics, 162 (2015), 174-191.  doi: 10.1016/j.ijpe.2015.01.019.

[4]

J. ChenL. LiangD. Yao and S. Sun, Price and quality decisions in dual-channel supply chains, European Journal of Operational Research, 259 (2017), 935-948.  doi: 10.1016/j.ejor.2016.11.016.

[5]

Z. Chong, Apple supplier guilty of unsafe work conditions, report finds, CNET, January 18, (2018), https://www.cnet.com/news/china-labor-watch-finds-harsh-work-conditions-at-apple-supplier/.

[6]

F. El Ouardighi, Supply quality management with optimal wholesale price and revenue sharing contracts: A two-stage game approach, International Journal of Production Economics, 156 (2014), 260-268.  doi: 10.1016/j.ijpe.2014.06.006.

[7]

J. FanD. Ni and X. Tang, Product quality choice in two-echelon supply chains under post-sale liability: Insights from wholesale price contracts, International Journal of Production Research, 55 (2017), 2556-2574.  doi: 10.1080/00207543.2016.1240382.

[8]

J. FanD. Ni and X. Fang, Liability cost sharing, product quality choice, and coordination in two echelon supply chains, European Journal of Operational Research, 284 (2020), 514-537.  doi: 10.1016/j.ejor.2020.01.003.

[9]

H. Fu, M. Liu and B. Chen, Supplier's investment in manufacturer's quality improvement with equity holding, Journal of Industrial & Management Optimization, 17(2) (2021), 649–668. doi: 10.3934/jimo.2019127.

[10]

F. GangiD. SalernoA. Meles and L. M. Daniele, Do Corporate social responsibility and corporate governance influence intellectual capital efficiency?, Sustainability, 11 (2019), 1899.  doi: 10.3390/su11071899.

[11]

Z. GeQ. Hu and Y. Xia, Firms' R & D cooperation behavior in a supply Chain, Production and Operations Management, 23 (2014), 599-609.  doi: 10.1111/poms.12037.

[12]

S. Huang, H. Fu and Y. Ma, Coordinating a supply chain when manufacturer makes cost reduction investment in supplier, Discrete Dynamics in Nature and Society, (2016), 1–10. doi: 10.1155/2016/4762397.

[13]

T. Iida, Coordination of cooperative cost-reduction efforts in a supply chain partnership, European Journal of Operational Research, 222 (2012), 180-190.  doi: 10.1016/j.ejor.2012.03.029.

[14]

J. R. Kroes and S. Ghosh, Outsourcing congruence with competitive priorities: Impact on supply chain and firm performance, Journal of operations management, 28 (2010), 124-143.  doi: 10.1016/j.jom.2009.09.004.

[15]

J. Kiss, The real price of an iPhone 5: Life in the Foxconn factory, The Guardian, Deceber, 17, (2012), https://www.theguardian.com/technology/2012/sep/13/cost-iphone-5-foxconn-factory.

[16]

Y. LiD. NiZ. Xiao and X. Tang, Signaling product quality information in supply chains via corporate social responsibility choices, Sustainability, 9 (2017), 2113.  doi: 10.3390/su9112113.

[17]

J. LiF. Zhang and S. Sun, Building consumer-oriented CSR differentiation strategy, Sustainability, 11 (2019), 664.  doi: 10.3390/su11030664.

[18]

P. MaH. Wang and J. Shang, Supply chain channel strategies with quality and marketing effort-dependent demand, International Journal of Production Economics, 144 (2013a), 572-581.  doi: 10.1016/j.ijpe.2013.04.020.

[19]

P. MaH. Wang and J. Shang, Contract design for two-stage supply chain coordination: Integrating manufacturer-quality and retailer-marketing efforts, International Journal of Production Economics, 146 (2013b), 745-755.  doi: 10.1016/j.ijpe.2013.09.004.

[20]

P. MaJ. Shang and H. Wang, Enhancing corporate social responsibility: Contract design under information asymmetry, Omega, 67 (2017), 19-30.  doi: 10.1016/j.omega.2016.03.004.

[21]

T. Maiti and B. C. Giri, Two-way product recovery in a closed-loop supply chain with variable markup under price and quality dependent demand, International Journal of Production Economics, 183 (2017), 259-272.  doi: 10.1016/j.ijpe.2016.09.025.

[22]

N. M. ModakN. Kazemi and L. E. Cárdenas-Barrón, Investigating structure of a two-echelon closed-loop supply chain using social work donation as a corporate social responsibility practice, International Journal of Production Economics, 207 (2019), 19-33.  doi: 10.1016/j.ijpe.2018.10.009.

[23]

D. Ni, K. W. Li and X. Tang, Social responsibility allocation in two-echelon supply chains: Insights from wholesale price contracts., European Journal of Operational Research, 207 (2010), 1269–1279. doi: 10.1016/j.ejor.2010.06.026.

[24]

S. A. Raza, Supply chain coordination under a revenue-sharing contract with corporate social responsibility and partial demand information, International Journal of Production Economics, 205 (2018), 1-14.  doi: 10.1016/j.ijpe.2018.08.023.

[25]

L. Tetrevova and M. Jelinkova, Municipal social responsibility of statutory cities in the Czech Republic, Sustainability, 11 (2019), 2308.  doi: 10.3390/su11082308.

[26]

Y. Tong and Y. Li, External intervention or internal coordination? Incentives to promote sustainable development through green supply chains, Sustainability, 10 (2018), 2857.  doi: 10.3390/su10082857.

[27]

L. Tobias, Apple and Foxconn: Sustainable labor is a must, GreenBiz, February, 16, (2012), https://www.greenbiz.com/blog/2012/02/16/apple-and-foxconn-sustainable-labor-must.

[28]

S. WangQ. Hu and W. Liu, Price and quality-based competition and channel structure with consumer loyalty, European Journal of Operational Research, 262 (2017), 563-574.  doi: 10.1016/j.ejor.2017.03.052.

[29]

J. Wang and H. Shin, The impact of contracts and competition on upstream innovation in a supply chain, Production and Operations Management, 24 (2015), 134-146.  doi: 10.1111/poms.12218.

[30]

T. XiaoY. Xia and G. P. Zhang, Strategic outsourcing decisions for manufacturers competing on product quality, IIE Transactions, 46 (2014), 313-329.  doi: 10.1080/0740817X.2012.761368.

[31]

X. Yan, An analysis of contract form for supply chains with quality improvement, International Transactions in Operational Research, 25 (2018), 1879-1906.  doi: 10.1111/itor.12266.

[32]

X. YanH. Zhao and K. Tang, Requirement or promise? An analysis of the first-mover advantage in quality contracting, Production and Operations Management, 24 (2015), 917-933.  doi: 10.1111/poms.12315.

[33]

Y. YanR. Zhao and Y. Lan, Moving sequence preference in coopetition outsourcing supply chain: Consensus or conflict, International Journal of Production Economics, 208 (2019), 221-240.  doi: 10.1016/j.ijpe.2018.11.020.

[34]

S. H. Yoo and T. Cheong, Quality improvement incentive strategies in a supply chain, Transportation Research Part E: Logistics and Transportation Review, 114 (2018), 331-342.  doi: 10.1016/j.tre.2018.01.005.

[35]

J. Yu and S. Ma, Impact of decision sequence of pricing and quality investment in decentralized assembly system, Journal of Manufacturing Systems, 32 (2013), 664-679.  doi: 10.1016/j.jmsy.2013.02.004.

[36]

J. ZhangQ. Cao and X. He, Contract and product quality in platform selling, European Journal of Operational Research, 272 (2019b), 928-944.  doi: 10.1016/j.ejor.2018.07.023.

[37]

H. Zhang and D. Hong, Manufacturer's R & D investment strategy and pricing decisions in a decentralized supply chain, Discrete Dynamics in Nature and Society, (2017a), 1–10. doi: 10.1155/2017/9879874.

[38]

H. Zhang and D. Hong, Supplier's joint investments in cost reduction and quality improvement in a decentralized Supply chain, Mathematical Problems in Engineering, (2017b), 1–10. doi: 10.1155/2017/4391475.

[39]

J. ZhangS. LiS. Zhang and R. Dai, Manufacturer encroachment with quality decision under asymmetric demand information, European Journal of Operational Research, 273 (2019a), 217-236.  doi: 10.1016/j.ejor.2018.08.002.

[40]

X. Zhao and R. Yin, Coordination of a socially responsible two-stage supply chain under price-dependent random demand, 4OR-A Quarterly Journal of Operations Research, 16(4) (2017), 379–400. doi: 10.1007/s10288-017-0368-9.

Figure 1.  The impacts of $ {\phi} $ on $ W $
Figure 2.  The impacts of $ {\phi} $ on $ \xi $
Figure 3.  The impacts of $ {\phi} $ on $ \varphi $
Figure 4.  The impacts of $ {\phi} $ on $ \prod_{CM1}^{\ast XT} $ and $ \prod_{OEM1}^{\ast XT} $
Figure 5.  The impacts of $ {\phi} $ on $ \prod_{CM2}^{\ast XT} $ and $ \prod_{OEM2}^{\ast XT} $
Figure 6.  The impacts of $ {\phi} $ on $ \prod_{CM3}^{\ast XT} $ and $ \prod_{OEM3}^{\ast XT} $
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