Abstract
Alleviating poverty is a critical problem in many developing countries such as China. In this paper, we consider a poverty-alleviation supply chain composed of one supplier in a poor area and one producer helping the supplier reduce poverty by fulfilling Corporate Social Responsibility (CSR). Our work aims at examining the impacts of government subsidies and Corporate Social Responsibility (CSR) on the poverty-alleviation operations. Four game-theoretic models are constructed and analyzed to investigate the impacts of coefficients of government subsidies and CSR cost sharing on the supplier’s and producer’s profits, social welfare growth, CSR level, wholesale price, output of the supplier, and retail price. Our findings suggest that the most effective poverty-alleviation mechanism in most cases is the combination of government subsidies and market efforts. Contrary to common beliefs that companies have to sacrifice profit for social responsibility, we show that poverty alleviation is reconcilable with profit maximization and social welfare improvement, and companies can achieve a win-win situation of both poverty alleviation and profitability. Our work provides new insights for sustainable poverty alleviation and socially sustainable operations.
Highlights
Poverty is one of the most pressing social problems around the world, especially in developing countries, and China is no exception
Our findings reveal that appropriate Corporate Social Responsibility (CSR) cost sharing and government subsidies can improve the profits of the supplier and producer, as well as social welfare
We find that when the coefficient of government subsidies is larger than a certain threshold, the wholesale price is increased, the supplier would like to produce more with the help of CSR
Summary
Poverty is one of the most pressing social problems around the world, especially in developing countries, and China is no exception. Apple Inc. takes market-oriented poverty alleviation and value sharing as its focus, and has fulfilled its Corporate Social Responsibilities (CSR) by investing in developing kiwi fruit, tea and other characteristic agricultural industries to help more than ten thousand farmers located in Shimian County, Hanyuan County and other counties of Sichuan Province move out of poverty. Lee shows that in a poverty-alleviation supply chain, a producer can both earn profit and help poor suppliers reduce poverty [8]. The results showed that both private and public signals would improve farmers’ welfare under certain conditions [30] Another stream of research established a green poverty-alleviation supply chain by considering the green level and the manufacturer’s microfinances for the poor supplier and examined different power structures using game-theoretic models. By applying a tripartite evolutionary game, four evolutionary stable strategies were obtained, and a more appropriate choice was found to reduce poverty
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