The paradox of strategic altruistic behaviour in a low carbon supply chain

Strategic altruistic behaviours by supply chain members are frequently observed in practice, often attributed to a desire for overall supply chain success. However, existing literature lacks a clear connection between benefiting others and benefiting oneself. This paper uses a stylised model to demonstrate that the retailer’s strategic altruism can benefit its own profit within the context of a low carbon supply chain. The key mechanism is that retailer’s strategic altruism encourages the supplier to devote more efforts in carbon reduction, which in turn boosts the product margin. We further investigate how a profit-seeking retailer should strategically exhibit altruistic behaviours. The retailer’s optimal degree of strategic altruistic behaviour balances two effects: the efficacy degradation effect, where the retailer’s degree of strategic altruistic behaviour decreases as the carbon reduction effort cost coefficient increases, and the effort compensation effect, where the retailer compensates for the supplier’s decreased carbon reduction efforts by displaying stronger altruism. We also show that a well-structured contract, specifying the supplier’s minimum required carbon reduction efforts based on the retailer’s strategic altruistic behaviour, can increase the likelihood of a win-win scenario. Finally, the retailer’s optimal timing of strategic altruistic behaviours is determined by a balance between the future and current benefit effects, with early-stage altruism favoured when the supplier carbon reduction cost efficient is low and consumer sensitivity to carbon reduction is high, and late-stage altruism preferred when the cost efficient is high and consumer sensitivity is low, while moderate conditions favour altruism at every stage.