Incentive Decision for Supply Chain with Corporate Social Responsibility and Lag Effect
Round 1
Reviewer 1 Report
Dear Authors
Thank you very much for your interesting article. It initiates reflections anot only on CSR throughout the supply chain, but also on general sustainability issues on this matter.
I was triggered by the effects of collaborating, taking centralized or decentralized vieuwpoints of decision making on CSR in the supply chain. But more current issues such as the circular economic paradigm didn't seem the scope of the current paper. Taking a two-step supply chain model as a starting point is more feasible but less innovative and has less ecological validity. But you argued well why you started with this down-sized problem.
I think your introduction could benefit from a bit more focus. It could be written in a more compact way. The motivation for your basic model on the other hand might benefit from more references and explanations on why you used these central constructs.
Also in line with my previous remark, explain what is so new and original in this paper in comparison with existing research.
Overall I think there is a good link between the comparison of the possible models, the managerial components of the models and the recommendations.
Author Response
Paper title: Incentive decision for supply chain with corporate social responsibility and lag effect
Authors: Huijin Cheng and Hao Ding
Dear Editor and Reviewers,
We would like to thank you for your efforts in reviewing our manuscript and providing many helpful comments and suggestions. Those comments are all valuable and very helpful for revising and improving our paper, as well as the important guiding significance to our researches. We have studied comments very carefully. Based on your criticisms, comments and suggestions, we have revised the manuscript carefully. The details are explained below, where the number of the response is in correspondence with the number of the reviewers’ comments and suggestions.
Response to Reviewer 1 Comments
Point: I think your introduction could benefit from a bit more focus. It could be written in a more compact way. The motivation for your basic model on the other hand might benefit from more references and explanations on why you used these central constructs. Also in line with my previous remark, explain what is so new and original in this paper in comparison with existing research. Overall I think there is a good link between the comparison of the possible models, the managerial components of the models and the recommendations.
Response: Thanks for your suggestion. In section 1, we have supplemented and summarized the literature to better explain the motivation and innovations of the article. And in section 5, the enlightenments obtained through research conclusions are added.
Details:
Introduction section:
In recent years, due to the importance of CSR, many scholars began to take CSR as a key factor in the operational decision-making of the supply chain. Dominating types of supply chain studied include two-echelon supply chain, three-echelon supply chain and closed-loop (reverse) supply chain [4-8]. In order to achieve supply chain coordination and improve the performance level of CSR, supply chain enterprises will adopt some contractual methods to meet the needs of all parties, such as two-part pricing, revenue sharing, cost sharing [9-13]. Cruz (2013) proposed a comprehensive supply chain decision-making model based on CSR, trying to capture the potential supply chain disruption risk, social risk and demand uncertainty risk in the supply chain [14]. Modak et al. (2019a) considered two kinds of CSR tools in the closed-loop supply chain, social work donation (SWD) and investment recovery. They proposed a mathematical model for maximizing expected profits under the carbon emission tax [6]. Modak et al. (2019b) analyzed the impact of closed-loop supply chain with CSR on environmental friendly channel performance in the context of CSR practice [7]. Hosseini motlag et al. (2019a) considered the optimal pricing, sustainability level and CSR decision of reverse supply chain under demand disruption [8]. Stranieri et al. (2019) studied the impact of CSR activities on the relationship restructuring of the food supply chain [15]. Hosseini Motlagh et al. (2019b), Jokar et al. (2019) took CSR investment as an important decision-making in the context of supply chain, and analyzed the coordination of supply chain under scenario demand [16,4].
Combing the above literatures, we find that CSR activities can not only reduce the potential supply chain disruption risk, social risk and demand uncertainty risk in global supply chain operation, but also improve corporate reputation to increase the market demand of enterprises and bring long-term profits [17]. Many scholars neglect the influence of corporate reputation on the performance of supply chain when they consider the decision-making of CSR. The change of CSR can predict the change of corporate reputation. Over time, it may encourage leaders to gain more benefits by continuously investing in CSR activities, so as to create sustainable competitive advantage [18]. In order to better improve the corporate reputation, many enterprises will also spread CSR through advertising, such as Walmart, Kroger and other enterprises. Therefore, when discussing the decision-making of CSR in supply chain, this paper considers a dynamic change of corporate reputation, which mainly includes two factors, one is the level of CSR, the other is the strength of advertising. The change of corporate reputation is not immediate, and there is often a delay effect [19]. For example, in real life, manufacturing industry plays a major role in fulfilling CSR. The social responsibility activities of manufacturing enterprises cover the research and development of product technology, low-carbon emission efforts, etc. This is a long-term and continuous process. Therefore, the current CSR investment will have a significant impact on the level of CSR of later products. Based on this, we try to set a delay time for CSR of manufacturing industry to represent the delay effect of corporate reputation. Considering the influence of advertising on supply chain operation strategy, Taboubi (2017) studied the price and advertising coordination in bilateral monopoly from a dynamic perspective [20]. Buratto et al. (2019) coordinated the supply chain by studying the cooperative advertising plan and price discount mechanism [21]. Lu et al. (2019) proposed a dynamic advertising game in supply chain management [22]. Few scholars analyze the impact of advertising on corporate reputation, and then make the decision of CSR in the supply chain.
For the operation strategy of the supply chain considering government subsidies, most scholars choose to study green supply chain management. They discuss the carbon tax or emission reduction subsidy policies proposed by the government, and put forward the policy scheme that can maximize the environmental benefits. Hafezalkotob et al. (2016) set up the government as the main leader, implemented green subsidies and carbon tax subsidies to explore the impact of environmental policies on supply chain performance [23]. Zhang et al. (2017) analyzed the impact of three government policies on two competitive supply chains under decentralized or centralized decision-making [24]. Yi et al. (2019) believe that the subsidy policy can not only improve the level of energy conservation, but also reduce carbon emissions [25]. Only a few scholars design government subsidies in the social responsibility of supply chain enterprises. Arya et al. (2015) discussed the impact of CSR subsidies on the supply chain. As incentives are usually linked to market value, enterprises not only have additional incentives to achieve social goals (such as by donating inventory), but also incentives to increase the retail market price [26]. Liu et al. (2018) constructed a three-stage Stackelberg model for retailer led decision-making of supply chain social responsibility under government subsidies. They used the model to analyze the optimal decision-making with and without government subsidies. The results show that, compared with non-governmental subsidies, a certain range of government subsidies can promote supply chain members to assume social responsibility, improve the overall performance and social welfare of the supply chain [27]. In prior studies, most scholars consider the incentive role of supply chain CSR in a unidirectional way. While in real life, most supply chains involve both internal and external cooperation. This paper proposes a government subsidy-mixed contract scenario to explore the internal and external collaborative decision-making of the decentralized supply chain.
In light of the past literatures, we found that scholars have taken CSR as an important reference factor in supply chain operation. To some extent, CSR can improve the performance of supply chain enterprises（Cater, 2002; Chiou, 2011）[28,29]. On the basis of considering the performance level of CSR, maximizing the profits of supply chain enterprises, to explore the decision-making of each node enterprise in the supply chain is the current research focus of scholars. Owing to the spillover effect problem in the process of fulfilling CSR, the establishment of selective a incentive mechanism is necessary. However, most scholars choose closed-loop supply chain and green supply chain when considering the government incentive behavior. Few scholars consider the government subsidy into the supply chain CSR operation strategy, and analyze how to design the subsidy strategy to encourage the supply chain members to bear more CSR. In addition, advertising factors are concerned in the operation of green supply chain and reverse supply chain. Advertising effects can effectively improve the goodwill of enterprises, and then increase market share. But few scholars take into account the influence of advertising effect on supply chain decision-making when the supply chain node enterprises perform their social responsibility behavior. At the same time, the impact of CSR on business reputation has a delayed effect. Dynamic analysis is more in line with the actual supply chain operation than static analysis.
Based on the above discussion, this paper establishes a two-echelon supply chain composed of one manufacturer and one retailer, and considers the impact of corporate reputation with delay effect on supply chain demand into supply chain decision-making. It dynamically analyzes the level of social responsibility and corporate reputation of the supply chain enterprises, and considers the decision-making of CSR in the supply chain in five scenarios, traditional centralized decision-making, traditional decentralized decision-making, decentralized supply chain internal cooperation decision-making under mixed contract, decentralized supply chain external cooperation decision-making under government subsidy, decentralized supply chain internal and external cooperation decision-making under mixed contract government subsidy. This paper attempts to answer the following questions.
(1) How does the difference between decentralized supply chain structure and centralized supply chain structure affect the decision-making of CSR in the supply chain?
(2) What is the impact of delay effect on the optimal decision of CSR in the supply chain?
(3) What is the impact of government subsidy rate on the optimal decision-making of CSR in the supply chain?
(4) In different scenarios, how to improve the performance level of supply chain CSR?
The arrangement of this paper is as follows. In section 2, the variables and functions of the basic model are described. In section 3, we use the differential game model to discuss the CSR decision-making of supply chain enterprises in five scenarios. Numerical simulation and analysis are shown in section 4. The research conclusions and further improvement direction are described in Section 5.
Conclusions section:
As shown in the above conclusions, the delay time benefits the manufacturer's CSR efforts, the level of CSR and reputation in the supply chain. However, it could hurt the economic performance of enterprises and cause investment waste when the delay time gets too long. The cost of CSR increases and the supply chain's overall profit decreases as the delay time goes up. Therefore, manufacturers should try to shorten the delay time and reduce the delay effect. Secondly, the threshold of delay time should be considered in the internal collaboration of the supply chain. If the delay time is within this threshold, then a joint decision can be made in the supply chain, otherwise, it is not suitable. In addition, as an important stakeholder outside the supply chain, the government should strengthen the external governance capacity of the supply chain. Using the government subsidy function to improve the enthusiasm of supply chain enterprises in fulfilling their social responsibilities, and ultimately play a positive role in the overall profits of the supply chain.
Reviewer 2 Report
In this paper five different modes of governing CSR in supply chains are explored. By looking at different influencing factors on the CSR performance level, the reputation and the profit. The authors conclude that there are different situtations, in which the 5 modes create different results. And as the authors want to encance the CSR performance level, the reputation and the overall supply chain profit, they give some recommendations for the subsidies of governments. Further they find, that the delay time has a negative effect and creates a breaking point, where centralised decision making creates higher overall profit any more.
The first sentence of the abstract:
"The frequent absence of social responsibility urges supply chain enterprises to pay more attention to the performance of corporate social responsibility"
does not fit to later statements on motivation to integrate CSR into Supply Chains. It is not a proper start for this article.
In line 78f. you refer to the latest relevant literature: "we find that the objective of CSR is mainly to improve corporate reputation, increase the market demand of enterprises, and bring long-term profit"
What about the motivation to reduce risks. Escpecially on regard of supply chains, the risks concerning the access to proper resources is relevant. The access could get harder because of environmental challenges or because of higher regulations. Further regulations in general might be a motivation.
It would be good to mention, what was the relevant literature and for example what kind of geographical focus is inherent.
Maybe it is enough to make clear, that you look at a special group of companies, which focus on these objectives. And therefore you can explain which influencing factors you choose for your quantitative model.
As descibed in line 99, 114f., 145ff. you reduce the efforts of manufacturers for CSR on technological investments and product safety. Here it is important to mention, that there might be a lot more different ways for manufacturers to realise CSR. One main topic is in generel the productdevelopment. What kind of materials is it made of. What about the construction concerning the possibility to repair and the longevity. Often there is no need for technological investments to enhance the situation of employees concerning social aspects on CSR.
So it would be good, to go more into detail in the beginning: What do you have in mind if you talk about the CSR attributes of product. As you start in your introduction with the wide interpretation of bowen of CSR and just talk about economic, ecological and social aspects. Please be more precise and reduce your findings on the relevant enterprises, branches or countries.
The conclusion in chapter 5 are made in accordance of the mathematic model but they are not that surprising. Especially conclusion 2 and 6. Maybe it is a benefit to have a theoretical quantitative argument for the six conclusions. But as there are a lot of general assumptions in the model, the effect of convincing the reader is not that high.
line 133f.: It would be good to give more information, what you understand with "time delay of market effect". As this is one of your main findings. It would be good to give the reader a deeper understanding, what kind of market effects you think of. And do you know, how it might be measured. Maybe this is also one aspect for further research?
line 164: what do you mean with the abbreviation SCSR?
line 361: you have the wrong font size for 3.2.2
Please find a consistent way to write: advertising cooperation cost sharing revenue
sharing hybrid contract.
Author Response
Paper title: Incentive decision for supply chain with corporate social responsibility and lag effect
Authors: Huijin Cheng and Hao Ding
Dear Editor and Reviewers,
We would like to thank you for your efforts in reviewing our manuscript and providing many helpful comments and suggestions. Those comments are all valuable and very helpful for revising and improving our paper, as well as the important guiding significance to our researches. We have studied comments very carefully. Based on your criticisms, comments and suggestions, we have revised the manuscript carefully. The details are explained below, where the number of the response is in correspondence with the number of the reviewers’ comments and suggestions.
Response to Reviewer 2 Comments
Point 1. The first sentence of the abstract: "The frequent absence of social responsibility urges supply chain enterprises to pay more attention to the performance of corporate social responsibility" does not fit to later statements on motivation to integrate CSR into Supply Chains. It is not a proper start for this article.
Response 1. Thanks for your suggestion. First sentence is revised as “With the deepening of economic globalization and international division of labor, enterprises gradually turn to supply chain management methods that aiming at win-win cooperation. An enterprise’ CSR behaviors will affect the interests of other enterprises in the supply chain through transmission, diffusion, amplification, feedback, etc.”
Point 2. In line 78f. you refer to the latest relevant literature: "we find that the objective of CSR is mainly to improve corporate reputation, increase the market demand of enterprises, and bring long-term profit". What about the motivation to reduce risks. Especially on regard of supply chains, the risks concerning the access to proper resources is relevant. The access could get harder because of environmental challenges or because of higher regulations. Further regulations in general might be a motivation.
Response 2. This sentence is revised as “Combing the latest relevant literatures, we find that CSR activities can not only reduce the potential supply chain disruption risk, social risk and demand uncertainty risk in global supply chain operation, but also improve corporate reputation to increase the market demand of enterprises and bring long-term profits [17].”
Point 3. What was the relevant literature and for example what kind of geographical focus is inherent. Maybe it is enough to make clear, that you look at a special group of companies, which focus on these objectives. And therefore you can explain which influencing factors you choose for your quantitative model.
Response 3. In section 1, we have supplemented and summarized the literature to better explain the motivation and innovations of the article.
Details:
In recent years, due to the importance of CSR, many scholars began to take CSR as a key factor in the operational decision-making of the supply chain. Dominating types of supply chain studied include two-echelon supply chain, three-echelon supply chain and closed-loop (reverse) supply chain [4-8]. In order to achieve supply chain coordination and improve the performance level of CSR, supply chain enterprises will adopt some contractual methods to meet the needs of all parties, such as two-part pricing, revenue sharing, cost sharing [9-13]. Cruz (2013) proposed a comprehensive supply chain decision-making model based on CSR, trying to capture the potential supply chain disruption risk, social risk and demand uncertainty risk in the supply chain [14]. Modak et al. (2019a) considered two kinds of CSR tools in the closed-loop supply chain, social work donation (SWD) and investment recovery. They proposed a mathematical model for maximizing expected profits under the carbon emission tax [6]. Modak et al. (2019b) analyzed the impact of closed-loop supply chain with CSR on environmental friendly channel performance in the context of CSR practice [7]. Hosseini motlag et al. (2019a) considered the optimal pricing, sustainability level and CSR decision of reverse supply chain under demand disruption [8]. Stranieri et al. (2019) studied the impact of CSR activities on the relationship restructuring of the food supply chain [15]. Hosseini Motlagh et al. (2019b), Jokar et al. (2019) took CSR investment as an important decision-making in the context of supply chain, and analyzed the coordination of supply chain under scenario demand [16,4].
Combing the above literatures, we find that CSR activities can not only reduce the potential supply chain disruption risk, social risk and demand uncertainty risk in global supply chain operation, but also improve corporate reputation to increase the market demand of enterprises and bring long-term profits [17]. Many scholars neglect the influence of corporate reputation on the performance of supply chain when they consider the decision-making of CSR. The change of CSR can predict the change of corporate reputation. Over time, it may encourage leaders to gain more benefits by continuously investing in CSR activities, so as to create sustainable competitive advantage [18]. In order to better improve the corporate reputation, many enterprises will also spread CSR through advertising, such as Walmart, Kroger and other enterprises. Therefore, when discussing the decision-making of CSR in supply chain, this paper considers a dynamic change of corporate reputation, which mainly includes two factors, one is the level of CSR, the other is the strength of advertising. The change of corporate reputation is not immediate, and there is often a delay effect [19]. For example, in real life, manufacturing industry plays a major role in fulfilling CSR. The social responsibility activities of manufacturing enterprises cover the research and development of product technology, low-carbon emission efforts, etc. This is a long-term and continuous process. Therefore, the current CSR investment will have a significant impact on the level of CSR of later products. Based on this, we try to set a delay time for CSR of manufacturing industry to represent the delay effect of corporate reputation. Considering the influence of advertising on supply chain operation strategy, Taboubi (2017) studied the price and advertising coordination in bilateral monopoly from a dynamic perspective [20]. Buratto et al. (2019) coordinated the supply chain by studying the cooperative advertising plan and price discount mechanism [21]. Lu et al. (2019) proposed a dynamic advertising game in supply chain management [22]. Few scholars analyze the impact of advertising on corporate reputation, and then make the decision of CSR in the supply chain.
For the operation strategy of the supply chain considering government subsidies, most scholars choose to study green supply chain management. They discuss the carbon tax or emission reduction subsidy policies proposed by the government, and put forward the policy scheme that can maximize the environmental benefits. Hafezalkotob et al. (2016) set up the government as the main leader, implemented green subsidies and carbon tax subsidies to explore the impact of environmental policies on supply chain performance [23]. Zhang et al. (2017) analyzed the impact of three government policies on two competitive supply chains under decentralized or centralized decision-making [24]. Yi et al. (2019) believe that the subsidy policy can not only improve the level of energy conservation, but also reduce carbon emissions [25]. Only a few scholars design government subsidies in the social responsibility of supply chain enterprises. Arya et al. (2015) discussed the impact of CSR subsidies on the supply chain. As incentives are usually linked to market value, enterprises not only have additional incentives to achieve social goals (such as by donating inventory), but also incentives to increase the retail market price [26]. Liu et al. (2018) constructed a three-stage Stackelberg model for retailer led decision-making of supply chain social responsibility under government subsidies. They used the model to analyze the optimal decision-making with and without government subsidies. The results show that, compared with non-governmental subsidies, a certain range of government subsidies can promote supply chain members to assume social responsibility, improve the overall performance and social welfare of the supply chain [27]. In prior studies, most scholars consider the incentive role of supply chain CSR in a unidirectional way. While in real life, most supply chains involve both internal and external cooperation. This paper proposes a government subsidy-mixed contract scenario to explore the internal and external collaborative decision-making of the decentralized supply chain.
In light of the past literatures, we found that scholars have taken CSR as an important reference factor in supply chain operation. To some extent, CSR can improve the performance of supply chain enterprises（Cater, 2002; Chiou, 2011）[28,29]. On the basis of considering the performance level of CSR, maximizing the profits of supply chain enterprises, to explore the decision-making of each node enterprise in the supply chain is the current research focus of scholars. Owing to the spillover effect problem in the process of fulfilling CSR, the establishment of selective a incentive mechanism is necessary. However, most scholars choose closed-loop supply chain and green supply chain when considering the government incentive behavior. Few scholars consider the government subsidy into the supply chain CSR operation strategy, and analyze how to design the subsidy strategy to encourage the supply chain members to bear more CSR. In addition, advertising factors are concerned in the operation of green supply chain and reverse supply chain. Advertising effects can effectively improve the goodwill of enterprises, and then increase market share. But few scholars take into account the influence of advertising effect on supply chain decision-making when the supply chain node enterprises perform their social responsibility behavior. At the same time, the impact of CSR on business reputation has a delayed effect. Dynamic analysis is more in line with the actual supply chain operation than static analysis.
Based on the above discussion, this paper establishes a two-echelon supply chain composed of one manufacturer and one retailer, and considers the impact of corporate reputation with delay effect on supply chain demand into supply chain decision-making. It dynamically analyzes the level of social responsibility and corporate reputation of the supply chain enterprises, and considers the decision-making of CSR in the supply chain in five scenarios, traditional centralized decision-making, traditional decentralized decision-making, decentralized supply chain internal cooperation decision-making under mixed contract, decentralized supply chain external cooperation decision-making under government subsidy, decentralized supply chain internal and external cooperation decision-making under mixed contract government subsidy. This paper attempts to answer the following questions.
(1) How does the difference between decentralized supply chain structure and centralized supply chain structure affect the decision-making of CSR in the supply chain?
(2) What is the impact of delay effect on the optimal decision of CSR in the supply chain?
(3) What is the impact of government subsidy rate on the optimal decision-making of CSR in the supply chain?
(4) In different scenarios, how to improve the performance level of supply chain CSR?
The arrangement of this paper is as follows. In section 2, the variables and functions of the basic model are described. In section 3, we use the differential game model to discuss the CSR decision-making of supply chain enterprises in five scenarios. Numerical simulation and analysis are shown in section 4. The research conclusions and further improvement direction are described in Section 5.
Point 4. As described in line 99, 114f., 145ff. you reduce the efforts of manufacturers for CSR on technological investments and product safety. Here it is important to mention, that there might be a lot more different ways for manufacturers to realize CSR. One main topic is in general the product development. What kind of materials is it made of. What about the construction concerning the possibility to repair and the longevity. Often there is no need for technological investments to enhance the situation of employees concerning social aspects on CSR.
Response 4. In section 1, we add the definition of CSR products “In this paper, supply chain enterprises’ CSR performance could be reflected mainly in the product attributes. Product attributes here refer to improving satisfaction of customers and other enterprises in the supply chain through developing, producing and selling products with high quality, high environmental protection, strong safety performance and other CSR attributes.”
The line 99 is revised as “In this regard, manufacturers actively invest in CSR activities, research and develop, produce the products with CSR attributes. In order to improve the reputation of enterprises, retailers need to increase advertising investment to educate customers about social responsibility of products and to improve market demands.”
The line 114 is revised as “Manufacturers improve the green degree and safety level of products mostly through green raw material procurement, technical innovations and production line supervision, etc.”
The line 145 is revised as “Advertising efforts invested by retailers directly drives demands, while the level of CSR of unit product is improved by manufacturers through CSR investment, which would have a further impact on product demands.”
Point 5. The conclusion in chapter 5 are made in accordance of the mathematic model but they are not that surprising. Especially conclusion 2 and 6. Maybe it is a benefit to have a theoretical quantitative argument for the six conclusions. But as there are a lot of general assumptions in the model, the effect of convincing the reader is not that high.
Response 5. In section 5, the enlightenments obtained through research conclusions are added.
Details:
As shown in the above conclusions, the delay time benefits the manufacturer's CSR efforts, the level of CSR and reputation in the supply chain. However, it could hurt the economic performance of enterprises and cause investment waste when the delay time gets too long. The cost of CSR increases and the supply chain's overall profit decreases as the delay time goes up. Therefore, manufacturers should try to shorten the delay time and reduce the delay effect. Secondly, the threshold of delay time should be considered in the internal collaboration of the supply chain. If the delay time is within this threshold, then a joint decision can be made in the supply chain, otherwise, it is not suitable. In addition, as an important stakeholder outside the supply chain, the government should strengthen the external governance capacity of the supply chain. Using the government subsidy function to improve the enthusiasm of supply chain enterprises in fulfilling their social responsibilities, and ultimately play a positive role in the overall profits of the supply chain.
Point 6. line 133f.: It would be good to give more information, what you understand with "time delay of market effect".
Response 6. With regard to delay time, we deepened the description in the literature review section. And an explanation is added at line 133.” The reason for the delay effect is that the transformation of CSR investment into CSR performance needs a process.”
Point 7. line 164: what do you mean with the abbreviation SCSR?
Response 7. SCSR is revised as “supply chain corporate social responsibility”.
Point 8. line 361: you have the wrong font size for 3.2.2.
Response 8. The font size has been corrected.
Point 9. Please find a consistent way to write: advertising cooperation cost sharing revenue sharing hybrid contract.
Response 9. The “advertising cooperation cost sharing revenue sharing hybrid contract” has been changed into “mixed contract”.
