Incentivizing emerging market suppliers for responsible international supply chain: Revenue-sharing and government subsidy
Zhang, Siyue and Hong, Jiangtao and Ma, Linxiang and Zhao, Nanyang (2024) Incentivizing emerging market suppliers for responsible international supply chain: Revenue-sharing and government subsidy. Computers and Industrial Engineering, 194. 110351. ISSN 0360-8352 (https://doi.org/10.1016/j.cie.2024.110351)
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Abstract
Many emerging market suppliers of multinational enterprises (MNEs) have been exposed to social responsibility controversies. These incidents significantly affect MNEs’ operations and emerging economies’ sustainable development. This paper considers a two-tier transnational supply chain model to explore the impact of different participants’ corporate social responsibility (CSR) engagements on their profits and social welfare. We consider two incentive schemes that could enhance emerging market suppliers’ CSR activities: revenue sharing from their buyers and subsidies from their governments. Using the supplier Stackelberg game, we find: 1) transnational operation costs hinder MNEs’ incentive to invest in CSR; 2) suppliers’ CSR activities have a larger impact on the demand for final products and emerging market welfare than MNEs’ activities; 3) suppliers will voluntarily engage in CSR activities, but only at an insufficient level, whereas MNEs revenue-sharing with suppliers and government subsidies to suppliers can improve suppliers’ CSR level; 4) government subsidy improves suppliers’ CSR activities to a larger extent than MNEs’ revenue-sharing. Our study fills the gap in CSR activities along the international supply chain. We also provide critical managerial implications to MNEs and their emerging market suppliers on reducing CSR risk, and policy implications to emerging market governments on realizing sustainable development.
ORCID iDs
Zhang, Siyue, Hong, Jiangtao, Ma, Linxiang ORCID: https://orcid.org/0000-0003-2153-4565 and Zhao, Nanyang;Persistent Identifier
https://doi.org/10.17868/strath.00090025-
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Item type: Article ID code: 90025 Dates: DateEventAugust 2024Published2 July 2024Published Online30 June 2024Accepted20 January 2024SubmittedSubjects: Social Sciences > Commerce > Business Department: Strathclyde Business School > Accounting and Finance Depositing user: Pure Administrator Date deposited: 25 Jul 2024 08:47 Last modified: 25 Sep 2024 11:04 Related URLs: URI: https://strathprints.strath.ac.uk/id/eprint/90025