Implications of Strategically Communicating Social Responsibility to Consumers in Online Retailing

ABSTRACT Recent research on social responsibility (SR) communication has focused on upstream supply chains; however, in this study, we analyze how to strategically communicate SR information to consumers in online retailing. We present the optimal SR communication strategies in agency selling and reselling modes and further explore how strategic SR communication strategies affect optimal prices, supply chain members' profits, the platform's SR standard of reselling mode, and the supplier's selling mode selection. The results indicate that both the platform and supplier choose strategically overstated SR communication when the supplier's SR level is moderate, and overstated SR communication is more likely to occur in agency selling with a low marginal selling cost. Interestingly, we find that the overstated SR communication strategy may create a win–win–win situation for the supplier, platform and consumers. Furthermore, SR communication motivates the supplier to choose agency selling. This phenomenon is driven by the profitability of SR overstating, which stems from consumers' additional willingness to pay for SR. The platform can strategically set a proper SR standard for the reselling mode to regulate overstating and encourage the supplier to choose the reselling mode. Counter‐intuitively, the optimal SR standard of the reselling mode is the minimum acceptable SR level of socially conscious consumers for products with a high commission rate and a relatively high SR level.