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Open AccessArticle

Signaling Product Quality Information in Supply Chains via Corporate Social Responsibility Choices

by Yuhui Li 1,2, Debing Ni 1,*, Zhuang Xiao 1 and Xiaowo Tang 1
1
School of Management and Economics, University of Electronic Science and Technology of China, Chengdu 610054, China
2
School of Mathematics and Computing Science, Guilin University of Electric and Technology, Guilin 541004, China
*
Author to whom correspondence should be addressed.
Sustainability 2017, 9(11), 2113; https://doi.org/10.3390/su9112113
Received: 10 September 2017 / Revised: 10 November 2017 / Accepted: 14 November 2017 / Published: 18 November 2017
This study focuses on how an upstream supplier signals the private information of its product quality with corporate social responsibility (CSR) choices to a downstream retailer and uninformed consumers in the final market. We build a signaling model to: capture the strategic interactions among the supplier, the retailer, and the final consumers in the supply chain; characterize completely the set of all separating perfect Bayesian equilibriums (PBEs); and finally, select a unique equilibrium that satisfies the intuitive criterion for exploring some comparative statics. The equilibrium results show that under some technical conditions: (1) a set of moderate levels of CSR conduct signal the upstream supplier’s high quality in the sense of separating PBEs; (2) the unique separating PBE satisfying the intuitive criterion is the one with the lowest CSR level that separates a high-quality supplier from a low-quality supplier; (3) the lowest CSR level decreases in the proportion of informed consumers and the low-quality supplier’s marginal CSR cost, but is independent of the high-quality supplier’s marginal CSR cost; (4) the profits of the high-quality supplier increase in proportion to the number of informed consumers and the low-quality supplier’s marginal cost CSR, but decrease in proportion to the high-quality supplier’s marginal CSR cost. Managerial insights are also discussed. View Full-Text
Keywords: corporate social responsibility; product quality; signaling game; supply chain corporate social responsibility; product quality; signaling game; supply chain
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Li, Y.; Ni, D.; Xiao, Z.; Tang, X. Signaling Product Quality Information in Supply Chains via Corporate Social Responsibility Choices. Sustainability 2017, 9, 2113.

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