Socially responsible retailer’s service provision strategies for poverty and inequity alleviation in the supply chain

Abstract

This paper examines the effects of a retailer’s value-added services on poverty alleviation where the retailer engages in corporate social responsibility (CSR) by considering consumer surplus. Considering two heterogeneous farmers (i.e., a poor farmer from an impoverished area with cost disadvantages and a normal farmer from a non-poverty area) selling their products through a common retailer, we develop a model to determine when a retailer bestows a uniform or differential service provision to farmers. We also examine the impact of cost disadvantage, per-unit service cost, and consumer surplus concern on supply chain participants’ profits and social welfare distribution under different service provision strategies. We find that supply chain participants’ preferences for service provision strategy are compatible when cost disadvantage and per-unit service cost are below a certain threshold. Retailer-provided services effectively increase each participant’s profit, but this may result in unequal proportions of their profits in social welfare, potentially impacting shared prosperity. The cost disadvantage negatively (positively) impacts the proportion of the poor (normal) farmer’s profit in the overall social welfare equation. However, when the retailer provides services solely to the anti-poverty (normal) product, the per-unit service cost positively affects the proportion of the normal (poor) farmer’s profit in social welfare while consistently improving the retailer’s profit proportion. In addition, higher retailer concern for consumers fosters greater compatibility in service strategy preferences. When the per-unit service cost is low and the ratio of services for the normal product is small, increasing the ratio of services can increase the profits of the poor farmer, the normal farmer, the retailer, and the consumer surplus simultaneously. The research sheds light on the potential tradeoffs and considerations required to create a more equitable and prosperous society.