Multiperiod Effects of Corporate Social Responsibility on Supply Chain Networks, Transaction Costs, Emissions, and Risk
University of Memphis
Assistant Professor, Department of Operations and Information Management, School of Business, University of Connecticut
Last modified: September 24, 2007
Due to its potential positive impact on transaction costs, emissions, and risk, corporate social responsibility is a concept of high importance in the business community. In this paper, we develop a framework for the analysis of the optimal levels of corporate social responsibility activities in a multiperiod supply chain network consisting of manufacturers,
retailers, and consumers. Manufacturers and retailers are multicriteria decision-makers who decide about their production and transaction quantities as well as the amount of social responsibility activities they want to pursue in order to maximize net return, minimize emission, and minimize risk over the multiperiod planning horizon. We construct the finitedimensional variational inequality governing the equilibrium of the multiperiod competitive supply chain network. The model allows us to investigate the interplay of the heterogeneous decision-makers in the supply chain and to compute the resultant equilibrium pattern of product outputs, transactions, product prices, and levels of social responsibility activities. A computational procedure that exploits the network structure of the problem is proposed and then applied to several numerical examples.