Abstract
This paper analyzes manufacturers’ wholesale price decisions and the evolutionarily stable strategies of the retailers’ marketing behavior in duopoly supply chains, where each chain consists of one manufacturer and many retailers. Each retailer chooses one of two marketing strategies: social responsibility or non-social responsibility (i.e., a firm only cares about the benefits of its shareholders). We identify the conditions under which a strategy profile is evolutionarily stable. Furthermore, we investigate the manufacturers’ wholesale prices and find the following: (i) the retailer’s social responsibility decreases the unit wholesale price; (ii) when the degree of the retailer’s social responsibility is medium, the social responsibility of the retailer in a supply chain increases the profit of the retailer’s own manufacturer and decreases the profit of the rival’s manufacturer; otherwise, it decreases the profits of the two manufacturers; and (iii) when each retailer exhibits its social responsibility moderately, a triple-win situation can be achieved.
Article PDF
Similar content being viewed by others
Avoid common mistakes on your manuscript.
References
Allen F, Carletti E, Marquez R (2014). Stakeholder governance, competition and firm value. CESifo Working pape (No. 4652).
Andersen M, Skjoett–Larsen T (2009). Corporate social responsibility in global supply chains. Supply Chain Management: An International Journal 14(2): 75–86.
Boyaci T, Gallego G (2002). Coordinating pricing and inventory replenishment policies for one wholesaler and one or more geographically dispersed retailers. International Journal of Production Economics 77(2): 95–111.
Cadbury A (2006). Corporate social responsibility. Twenty–First Century Society: Journal of the Academy of Social Sciences 1(1): 5–21.
Cespa G, Cestone G (2007). Corporate social responsibility and managerial entrenchment. Journal of Economics and Management Strategy 16(3): 741–771.
Chai C, Xiao T, Francis E (2018). Is social responsibility for firms competing on quantity evolutionary stable? Journal of Industrial and Management Optimization 14(1): 325–347.
Cheng B, Loannou L, Serafeim G (2014). Corporate social responsibility and access to finance. Strategic Management 35(1): 1–23.
Chiang T, Che Z, Wang T (2011). A design for environment methodology for evaluation and improvement of derivative consumer electronic product development. Journal of Systems Science and Systems Engineering 20(3): 260–274.
Cornell B, Shapiro C (1987). Corporate stakeholders and corporate finance. Financial Management 16(1): 5–14.
Cressman R (1992). The Stability Concept of Evolutionary Game Theory (Springer–Verlag, Berlin, Heidelberg).
Cruz J (2008). Dynamics of supply chain networks with corporate social responsibility through integrated environmental decision–making. European Journal of Operational Research 184(3): 1005–1031.
Cruz J (2009). The impact of corporate social responsibility in supply chain management: Multicriteria decisionmaking approach. Decision Support Systems 48(1): 224–236.
Cruz J (2013). Mitigating global supply chain risks through corporate social responsibility. International Journal of Production Research 51(13): 3995–4010.
Dahlsrud A (2008). How corporate social responsibility is defined: An analysis of 37 definitions. Corporate Social Responsibility and Environmental Management 15: 1–13.
Eriksson D, Sevensson G (2015). Elements affecting social responsibility in supply chains. Supply Chain Management: An International Journal 20(5): 561–566.
Fortune (2013). Top 100 social responsibility firms in China (in Chinese). Fortune March.
Friedman D (1991). Evolutionary games in economics. Econometrica 59(3): 637–666.
Gallear D, Ghobadian A, Chen W (2012). Corporate responsibility, supply chain partnership and perfor mance: An empirical examination. International Journal of Production Economics 140(1): 83–91.
Goering GE (2012). Corporate social responsibility and marketing channel coordination. Research in Economics 66(2): 142–148.
Hofbauer J, Sigmund K (1988). Evolutionary Games and Population Dynamics (Cambridge University Press, Cambridge).
Jensen M, Meckling W (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics 3(4): 305–360.
Lee MDP (2008). A review of the theories of corporate social responsibility: Its evolutionary path and the road ahead. International Journal of Management Reviews 10(1): 53–73.
Levy J (2009). A case for sustainable security systems engineering: Integrating national, human, energy and environmental security. Journal of Systems Science and Systems Engineering 18(4): 385–402.
Magill M, Quinzii M, Rochet J (2015). Atheory of the stakeholder corporation. Econometrica 83(5): 1685–1725.
Maloni M, Brown M (2006). Corporate social responsibility in the supply chain: Anapplication in the food industry. Journal of Business Ethics 68(1): 35–52.
Mankiw N (2014). Essentials of Economics (6ed),Higher Education Press.
Margolis J, Walsh J (2003). Misery loves companies: Rethinking social initiatives by business. Administrative Science Quarterly 48(2): 268–305.
McWilliams A, Siegel D, Wright P (2006). Corporate social responsibility: Strategic implications. Journal of Management Studies 43(1): 1–18.
Meredith R (1999). The newest ford generation takes the company spotlight. New York Times 14 May: C6.
Omran M, Atrill P, Pointon J (2002). Shareholders versus stakeholders: Corporate mission statements and investor returns. Business Ethics: A European Review 11(4): 318–328.
Panda S (2014). Coordination of a socially responsible supply chain using revenue sharing contract. Transportation Research Part E 67: 92–104.
Roca C, Cuesta J, Sánchez A (2009). Evolutionary game theory: Temporal and spatial effects beyond replicator dynamics. Physics of Life Reviews 6(4): 208–249.
Saeidi S, Sofian S, Saeidi P, Saeidi S, Saaeidi S (2015). How does corporate social responsibility contribute to firm financial performance? the mediating role of competitive advantage, reputation, and customer satisfaction. Journal of Business Research 68(2): 341–350.
Servaes H, Tamayo A (2013). The impact of corporate social responsibility on firm value: The role of customer awareness. Management Science 59(5): 1045–1061.
TateW, EllramL, Kirchoff J (2010). Corporate social responsibility reports: A thematic analysis related to supply chain management. Journal of Supply Chain Management 46(1): 19–44.
Taylor P, Jonker L (1987). Evolutionary stable strategies and game dynamics. Mathematical Biosciences 40(1–2): 145–156.
Weibull JW (1995). Evolutionary Games Theory (The MIT Press, Cambridge, Massachusetts, London, England).
Welford R, Frost S (2006). Corporate social responsibility in asian supply chains. Corporate Social Responsibility and Environmental Management 13(3): 166–176.
Xiao T, Yu G (2006). Supply chain disruption management and evolutionarily stable strategies of retailers in the quantity–setting duopoly situation with homogeneous goods. European Journal of Operational Research 173(2): 648–668.
Yoshimori M (1995). Whose company is it? the concept of the corporation in Japan and the West. Long Range Planning 28(4): 2–44.
Author information
Authors and Affiliations
Corresponding author
Additional information
Caichun Chai is a lecturer in School of Management Science and Engineering atNanjingUniversity of Finance and Economics, China. She received her Ph.D. in management science and engineering from Nanjing University in 2017, and M.S. in Mathematics from University of Science and Technology of China in 2007. As a visiting scholar, she has been for one year at University of California, Santa Cruz. Her research focuses on the supply chain management, evolution of corporate behavior, game theory, and dynamical systems.
Tiaojun Xiao is a Professor in School of Management and Engineering at Nanjing University. He received his Ph.D. in management science and engineering from Southeast University in 2001. Prof. Xiao was awarded the China National Funds for Distinguished Young Scientists in 2014. His current research interests include applied game theory, logistics and supply chain management, behavioral decision theory. He has authored or co-authored about 50 papers in several academic journals. He is an Editorial Board Member of Journal of Industrial and Management Optimization, etc.
Rights and permissions
About this article
Cite this article
Chai, C., Xiao, T. Wholesale Pricing and Evolutionarily Stable Strategy in Duopoly Supply Chains with Social Responsibility. J. Syst. Sci. Syst. Eng. 28, 110–125 (2019). https://doi.org/10.1007/s11518-018-5392-6
Published:
Issue Date:
DOI: https://doi.org/10.1007/s11518-018-5392-6