Mitigating global supply chain risks through corporate social responsibility

This paper presents a decision model that captures supply-side disruption risks, social risks, and demand-side uncertainty within an integrated global supply chain and corporate social responsibility (CSR) modelling and analysis framework. The global supply chain decision-makers must decide on the level of investment in CSR activities and the choice of trading partners (manufacturer or retailer) given their CSR consciousness and perceived riskiness in order to maximise profit and minimise their overall risk. The model incorporates individual attitudes towards disruption risks among the manufacturers and the retailers, with the demands for the product associated with the retailers being random. The model allows one to investigate the effects of heterogeneous CSR activities in a global supply chain and to compute the resultant equilibrium pattern of product outputs, transactions, product prices, and levels of social responsibility activities. The results show that CSR activities can potentially be used to mitigate global supply chain risk.

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