Green innovation decision and coordination of supply chain under corporate social responsibility and risk preferences

Abstract

Consumers' green awareness can induce enterprises to pay attention to corporate social responsibility (CSR), but the risk aversion preference of enterprises often makes them cautious about investment in new fields. The joint effect of CSR and manufacturer's risk preferences in green innovation investment on supply chain decision-making is worth exploring. This paper studies the green innovation decisions of supply chain enterprises when different entities undertake CSR under the random demand for green products, and the joint impact of manufacturer's risk preference and CSR on corporate decision-making and utility. Given the inefficiency of decentralized models with risk aversion, a side-payment self-enforcing contract is designed to reduce the green innovation risk of risk-averse manufacturer. The following conclusions are drawn: (i) A higher CSR ratio promotes lower prices, higher green innovation level and supply chain utility. And, manufacturer’s strong risk aversion inhibits green innovation level and manufacturer’s utility. (ii) Green innovation level and corporate utility are highest when the manufacturer and retailer share CSR. When only one company undertakes CSR, the CSR ratio plays a critical role in decision-making. (iii) After coordination, the utilities of both risk-averse manufacturer and retailer are improved, achieving a win–win situation. And green innovation level reaches the equilibrium in the centralized scenario, which is of great benefit to supply chain enterprises and the environment.