Which contract is more effective to combine with Reverse factoring in improving CSR: Revenue sharing or cost sharing?
Résumé
Nowadays, large retailers tend to adopt a revenue sharing (RS) or cost sharing (CS) contract to improve the Corporate Social Responsibility (CSR) performance of their suppliers. This paper explores which kind of sharing contract would be more effective in stimulating suppliers to enhance their CSR investment when the innovative financing scheme of reverse factoring (RF) is also adopted. Our results show that, in some cases, a single RS contract or CS contract can effectively promote the supplier’s CSR investment and achieve a win-win situation. However, the most appropriate sharing contracts depend on the business characteristics (production cost, wholesale price, demand uncertainty, and consumer CSR awareness). Managerially, our study suggests that combining RF with the appropriate sharing contract helps to improve CSR and the profitability of the supply chain