Coordination of a socially responsible supply chain using revenue sharing contract

• We focus on coordination of a socially responsible supply chain, where any one firm is socially responsible to its stakeholders.
• When the retailer is CSR its perfect welfare maximizing motive expels channel conflict.
• RS contract eliminates channel conflict when a firm is socially responsible.
• When the manufacturer is socially responsible, its pure profit is negative above a threshold of CSR because it pays the retailer to sell additional units.
• The wholesale price of RS contract is higher than the marginal production cost above a threshold of CSR in one and it is negative above a threshold of CSR in the other.

This paper explores coordination of a corporate social responsible (CSR) manufacturer–retailer chain by considering two cases, CSR retailer and CSR manufacturer. In manufacturer-Stackelberg game setting revenue sharing (RS) contract is used to coordinate the channel. It is found that CSR retailer’s perfect welfare maximizing motive resolves channel conflict, otherwise RS contract coordinates the channel. Wholesale price of RS contract is higher than marginal production cost above a threshold of CSR in one case and is negative above a threshold of CSR in the other. Also, CSR manufacturer’s pure profit is negative above a threshold of CSR.