Pricing strategy of closed loop supply chain considering different CSR investment modes

MATEC Web of Conferences 336, 09005 (2021) CSCNS2020 https://doi.org/10.1051/matecconf/202133609005 Pricing strategy of closed loop supply chain considering different CSR investment modes Yingluo Yan, and Fengmin Yao* School of Economics and Management, Harbin University of Science and Technology, Harbin 150080, China Keywords: Closed-loop supply chain, Corporate social responsibility, Profit donation, dominate retailer, Pricing decision. Abstract. More and more companies are beginning to realize that incorporating corporate social responsibility (CSR) and sustainable development into supply chain strategies and operations can bring them more competitive advantages. In the case that the manufacturer or retailer performs CSR through profit donation, the pricing decision-making problem of closed-loop supply chain (CLSC) with dominant retailer under different CSR investment modes is studied. The decision-making models of CLSC under the manufacturer’s and retailer’s CSR investment mode are constructed respectively. The conditions for enterprises to fulfil CSR through profit donation and the influence of different CSR investment modes on the pricing of new products and recycling of waste products are discussed. The research shows that no matter what kind of CSR investment mode, only when the consumers are more sensitive to the CSR investment of enterprises, the manufacturer and retailer will fulfil the CSR through profit donation. The CSR investment mode of the manufacturer is more beneficial to consumers, environment, CLSC members and whole system. No matter whether the dominant retailer carries out CSR investment or not, she always obtains more channel profits than the manufacturer. 1 Introduction With the continuous development of the global economy and technology, the replacement of household electronic appliances and other products is getting faster and faster, and a large number of waste products are produced, causing resource shortages and environmental pollution problems to become increasingly serious. In order to alleviate the adverse effects of waste products on human life and the environment, countries and enterprises all over the world are trying their best to find out how to recycle and reuse waste products, so as to effectively realize sustainable economic development. In this context, many manufacturers have begun to incorporate recycling and remanufacturing into their production decision-making system to effectively alleviate the contradiction between economic development and resource and environmental issues [1]. In reality, HP, Xerox, * Corresponding author: © The Authors, published by EDP Sciences. This is an open access article distributed under the terms of the Creative Commons Attribution License 4.0 (http://creativecommons.org/licenses/by/4.0/). MATEC Web of Conferences 336, 09005 (2021) CSCNS2020 https://doi.org/10.1051/matecconf/202133609005 IBM and other companies have not only achieved good economic benefits through active recycling and remanufacturing of waste products, but also effectively alleviated the pressure from increasingly stringent environmental regulations [1-2]. Therefore, the closed-loop supply chain (CLSC) management can effectively balance the coordinated development of the economy and the environment has received extensive attention from the business community and academia. On the other hand, as social issues such as food safety, quality defects, and production safety have become more prominent and consumers’ awareness of social responsibility has increased, all sectors of society are paying more and more attention to corporate social responsibility (CSR). That is to say, all sectors of society not only expect that enterprises can assume corresponding economic responsibilities, but also need to assume responsibilities to employees, other stakeholders, the environment and society. Related research also shows that CSR not only helps to improve the economic benefits and brand reputation of enterprises, but also helps to increase consumers’ willingness to pay for related products [3,4]. In this context, more and more companies have begun to incorporate CSR practices into their own development strategies to effectively achieve the coordinated development of economy, society and the environment. Internationally renowned companies such as Alibaba, Huawei, and Ford release CSR report every year to show their efforts and contributions to improving social and environmental benefits this year. At the same time, in recent years, consumers have paid more attention to whether companies actively contribute to the improvement of society and the environment in their business activities. They are also more willing to buy products from companies that actively donate to social welfare organizations or schools [5]. The charity donations have become an important measure for companies to demonstrate CSR. In reality, more and more companies have begun to actively donate to social charity organizations to fulfill CSR. For example, in 2013, Unilever launched the "Green Hatta" donation campaign, which effectively enhanced its brand image and commercial value. In 2015, Wal-Mart launched the “Love Snacks” donation activity and integrated the concept of sustainable development into all links of the supply chain. During the COVID-19 pandemic in 2020, companies such as Xiaomi, Midea, and Alibaba are actively donating to many countries affected by the pandemic. At present, many scholars have discussed the impact of CSR on CLSC operations. Panda et al. used consumer surplus as an indicator to measure the level of CSR fulfillment by enterprises, and pointed out that the company’s CSR behavior can help improve the overall performance of CLSC system [4]. Dai et al. studied the impact of CSR behavior on the pricing decision and coordination of the remanufacturing supply chain under the condition that consumers have differences in payment for new products and remanufactured products [6]. Liu et al. studied the influence of CSR preference and the proportion of green consumers on the selection of reverse recycling channels, pricing and recycling ratios in CLSC [7]. Wang et al. studied the impact of government subsidy incentives and corporate product donations on the CLSC recycling and pricing decisions under different decision-making modes [8]. Modak et al. constructed four recycling decision models for the CLSC under the manufacturer’s CSR input, and studied the influence of manufacturer’s CSR input behavior on the choice of the best recycling channel in the CLSC [9]. Although existing studies have explored the impact of CSR on the operation of CLSC from multiple aspects, there are few studies involving the operation of a retailer-led CLSC and the CSR investment (profit donations) of different member companies. However, with the rapid development of the retail industry and the rise of a large number of retail chain companies (such as Wal-Mart, Carrefour, and (...truncated)