مقاله سال ۲۰۱۶

 مجله امگا – Omega

 مجله امگا – Omega

In this research, we focus on contract design under information asymmetry. This research was motivated by the need to enhance the corporate social responsibility (CSR) of a supply chain (SC). We investigate a brand-name firm that offers high-tech products (smartphones and computers) to consumers. Its supplier is a large manufacturer of computer, communication and consumer electronics. The firm believes that it can boost demand by engaging in advertising campaigns and enhancing its brand reputation through commitment to CSR. This is the case observed in the relationship between Apple Inc. and Foxconn, which is Apple’s contract manufacturer (CM) in China. Foxconn is the world’s largest electronics contract manufacturer. Tragedies occurred at Foxconn’s Chinese facilities, where 18 employees of various plants attempted to take their own lives in 2010. Most of the workers committed suicide because they were unable to bear the stress, alienation and humiliation they experienced daily. These tragic events indicated that Foxconn had not met its social responsibility. Suicides among Foxconn workers have attracted much media attention. In 2012, Terry Gou, founder and chairman of Foxconn, announced that Foxconn and Apple would jointly share the cost of improving working conditions in Chinese factories. This research aims to design contracts by considering CSR efforts in a two-stage supply chain with one dominant retailer (Apple) and the contract manufacturer (Foxconn). Our models can be generalized to similar business settings.

Other examples of CSR can be found in Whole Foods Market and JiaDuoBao Group. Whole Foods Market (WFM) is the world’s largest retail chain of natural and organic foods. With a strong brand image and growing market presence, WFM operates more than 400 stores in the US, Canada and the U.K. WFM decides on its CSR activity with input from stakeholders (employees, investors, customers, suppliers and communities) [1]. It raises the bar in CSR by asking suppliers and manufacturers to grow green, taking a stand on GMOs, upcycling, exploring energy savings, investing in suppliers, encouraging diversity, urging transparency, caring for employees, supporting local communities, and giving back to the global community [2]. It has enjoyed customer loyalty and satisfaction, and many customers are willing to pay more for WFM’s corporate, environmental, and ethical conscience. The JiaDuoBao Group (JDB), a foreign-funded enterprise in the British Virgin Islands that produces and sells drinks and mineral water, donates 1 million and 1.1 million to WenChuan Earthquake and the YuShu Earthquake, respectively [3]. The sales volume of JDB was 50 million in 2007, rose to 120 million in 2008, and reached 150 million in 2010 [4]. JDB’s attention to vulnerable people and social welfare (CSR efforts) has helped enhance consumers’ perceptions of brand equity, which in turn could boost demand. Moreover, Chinese businesses paid much more attention to CSR and to serving society properly in recent years. For example, 24 chemical companies pledged to share social responsibility in 2008 [5], while more than one thousand firms in Shanghai did so in 2011 [6]. Moreover, Shenzhen took the lead in launching the local standard of CSR in 2015, which encourages and incentivizes firms to exert CSR efforts [7]. With the increasing emphasis on CSR in contemporary society, our  research provides a well-timed discussion and guidelines for businesses to expand and improve their CSR engagement.

Social responsibility comes at a cost and is fundamentally grounded in humanitarian obligations to employees, consumers, and others. This is a principle that Apple Inc. has publicly acknowledged. However, Apple does not have direct control over Foxconn’s operations and does not know how much CSR effort should be invested to improve the working conditions in Chinese factories. How could Apple motivate Foxconn to engage in CSR and improve its performance in employee welfare, ecological footprint and production safety?