Corporate social responsibility: The implications of cost improvement and promotion effort

Abstract

We investigate the interaction of these two strategic decisions when corporate social responsibility (CSR) is incorporated into supply chain partners' decisions. Our results show that, with a noncooperative CSR scenario, the upstream manufacturer is more aggressive in investing in innovation to reduce production costs, which strategically lowers the wholesale price to retailers, and the downstream retailer is also less reluctant to engage in more promotion efforts to induce demand in comparison with a cooperative CSR scenario. Furthermore, the customer's sensitivity to promotion effort may hurt the CSR level of each party.

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