Socially responsible e-commerce supply chains: Sales mode preference and store brand introduction

Abstract

Motivated by the widespread adoption of corporate social responsibility (CSR), we investigate a socially responsible e-commerce supply chain where the E-platform owns a store brand product and supports online sales of the manufacturer’s product under agency selling or reselling. The socially responsible firm has a mixed objective of its profit and consumer surplus. We explore how the firms’ CSR concern affects their decisions and economic performance. Our results contradict conventional wisdom which suggests that a firm has to sacrifice profitability to achieve social responsibility and that a firm’s CSR concern benefits its supply chain partner. Instead, we show that under agency selling, the E-platform’s concern on consumers can improve its own profit while harming the manufacturer’s profit. Furthermore, when both firms are socially responsible, their consumer concern can improve their profits simultaneously under reselling, leading to a “doing well by doing good” effect. As horizontal or vertical differentiation between the two products increases, this effect is more likely to be realized. Regarding firms’ sales mode preferences, in a traditional for-profit supply chain, agency selling is the only mode preferred by both parties. However, in a socially responsible supply chain, they can achieve preference alignment under either agency selling or reselling.