Abstract: Based on Baron's strategic CSR view, this paper considers a two-echelon supply chain consisting of an upstream manufacturer and a downstream retailer, and models three different CSR allocations by examining whether the manufacturer or the retailer is required to conduct CSR activities. Further, three-stage non-cooperative operations models are built corresponding to three different CSR allocations in the supply chain (the retailer alone is responsible for CSR activities, the manufacture alone is responsible for CSR activities, both are responsible for CSR activities)so as to identify the mutual incentive mechanism between supply chain members. The comparisons among the equilibrium economic and social performances under those three different CSR allocations show that under the condition that consumers positively respond to supply chain CSR activites, supply chain members' CSR choices are strategically complementary, leading to mutual incentives on their CSR behaviors, and due to this mutual incentive, the CSR allocation where both the manufacturer and the retailer are responsible for their own CSR activities reuslts in higher economic and social performance in equilibrium. Furthermore, A Nash bargaining model is used to describe cooperative CSR decision making and wholesale price contract negotiation. The corresponding Nash bargaining solution shows that since this cooperative operations can overcome the problem of double marginalization in the ex post product-transaction stage and the lack of CSR motivation (relative to the CSR motivations in centralized case)in the ex ante CSR strategic interaction stage (due to the strategic complementarity)under non-cooperative operations, the cooperation can further enhance both supply chain members' individual and the supply chain's social and economic performances(compared to the highest performance outcome under non-cooperative operations where both members are responsible). The main results obtained in both a non-cooperative and a cooperative settings are numerically illustrated. These results, on the one hand, provide a theoretical response to the debate on which member in a supply chain should be responsible for CSR activities, and on the other hand, point out that the focus in managing CSR interactions in a supply chain shall not be on how allocate CSR among supply chain members, but on whether to adopt a cooperative way to operate the supply chain.

Key words: supply chain, mutual incentive, CSR allocation, Nash bargaining solution