An Analysis of Corporate Social
Responsibility and Role of Intermediaries
for Value-Added Services
Jeffrey Darville and Alessio Faccia
Abstract
Consumers represent the largest market segment by total
population and frequency of transactions across the global
economy. However, many potential customers of products are unable to purchase goods due to their low
income. The root causes of poverty are explored in terms
of consumer products, the role of intermediaries, and the
social responsibility of corporations. Consumer purchases
often travel through intermediaries that extract profits
from the value chain because of market structures and
industry customs. This study reveals the hidden costs to
consumers in the prices of common fungible consumer
products, namely disposable batteries. This study examines the members of the value-added chain, and their
contributions relative to the producers of the product. It
will propose a model for transactional reallocation with
respect to the marginal utility of intermediaries and the
final price to end users. It is further proposed that the
creation of a national market to reduce intermediary costs
will more readily link final users with producers. Based
on this analysis it was determined that opportunities exist
to create greater profit margins for manufacturers who
could then increase capital expenditures, reinvest in
research and development while providing greater wages
to unskilled labor.
Keywords
Corporate social responsibility Á Value-added Á
Distribution chain Á Intermediary Á
Market allocation Á Supply chain Á
Stakeholder theory Á Consumer
pricing
1 Introduction
Corporate Social Responsibility (CSR) advocates should
take into consideration new methods of developing
Value-Added Statements (VAS). These new methods to
display value-added activities can be used to explain the
relative profit that is being claimed by each entity involved
in the production and distribution of products (Rathi 2017).
Profit should no longer be considered the primary metric to
judge organizational excellence. Instead, the role of each
entity in the creation and distribution of products could be
considered in the broad social context. Corporate actions
affect many aspects of individual consumer’s individual
well-being, including purchasing power through prices and
increased income through employment.
Battery companies provide a good test case to illustrate
how the Responsible Value-Added Analysis (RVAA) indicates who has been remunerated, based on the capital
invested. Portable power sources are used across the globe
and are needed by consumers in both developed and
developing countries. Each ring that makes up the supply
chain remunerates the same five types of capital: (a) labor
capital, (b) structural capital, (c) credit capital, (d) social
capital (infrastructural capital), and (e) risk capital. By analyzing each ring individually and by breaking down all the
remunerated capital sources and recomposing the RVAA by
capital type to show the whole chain, it is possible to observe
the incidence of the payment of each capital source for the
entire chain in each company and for each industry.
When focusing only on one company (as a single link in
the chain) it would not be possible to check whether the
whole industry (especially for production-related industries)
adheres to socially responsible behaviors, for example creating jobs. However, by expanding the level of analysis to
the industry and viewing it as interconnected parts of the
same whole a clearer picture of common trends emerges.
Incentives determine the likely response of each of the
three blocks in the RVAA. The motivations are different for
J. Darville Á A. Faccia (&)
American University in the Emirates, Dubai International
Academic City, P.O. Box: 503000 Dubai, UAE
e-mail: alessio.faccia@aue.ae
J. Darville
e-mail: jeffrey.darville@aue.ae
© Springer Nature Switzerland AG 2020
M. Mateev and J. Nightingale (eds.), Sustainable Development and Social Responsibility—Volume 1,
Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-030-32922-8_3
23
Responsibility and Role of Intermediaries
for Value-Added Services
Jeffrey Darville and Alessio Faccia
Abstract
Consumers represent the largest market segment by total
population and frequency of transactions across the global
economy. However, many potential customers of products are unable to purchase goods due to their low
income. The root causes of poverty are explored in terms
of consumer products, the role of intermediaries, and the
social responsibility of corporations. Consumer purchases
often travel through intermediaries that extract profits
from the value chain because of market structures and
industry customs. This study reveals the hidden costs to
consumers in the prices of common fungible consumer
products, namely disposable batteries. This study examines the members of the value-added chain, and their
contributions relative to the producers of the product. It
will propose a model for transactional reallocation with
respect to the marginal utility of intermediaries and the
final price to end users. It is further proposed that the
creation of a national market to reduce intermediary costs
will more readily link final users with producers. Based
on this analysis it was determined that opportunities exist
to create greater profit margins for manufacturers who
could then increase capital expenditures, reinvest in
research and development while providing greater wages
to unskilled labor.
Keywords
Corporate social responsibility Á Value-added Á
Distribution chain Á Intermediary Á
Market allocation Á Supply chain Á
Stakeholder theory Á Consumer
pricing
1 Introduction
Corporate Social Responsibility (CSR) advocates should
take into consideration new methods of developing
Value-Added Statements (VAS). These new methods to
display value-added activities can be used to explain the
relative profit that is being claimed by each entity involved
in the production and distribution of products (Rathi 2017).
Profit should no longer be considered the primary metric to
judge organizational excellence. Instead, the role of each
entity in the creation and distribution of products could be
considered in the broad social context. Corporate actions
affect many aspects of individual consumer’s individual
well-being, including purchasing power through prices and
increased income through employment.
Battery companies provide a good test case to illustrate
how the Responsible Value-Added Analysis (RVAA) indicates who has been remunerated, based on the capital
invested. Portable power sources are used across the globe
and are needed by consumers in both developed and
developing countries. Each ring that makes up the supply
chain remunerates the same five types of capital: (a) labor
capital, (b) structural capital, (c) credit capital, (d) social
capital (infrastructural capital), and (e) risk capital. By analyzing each ring individually and by breaking down all the
remunerated capital sources and recomposing the RVAA by
capital type to show the whole chain, it is possible to observe
the incidence of the payment of each capital source for the
entire chain in each company and for each industry.
When focusing only on one company (as a single link in
the chain) it would not be possible to check whether the
whole industry (especially for production-related industries)
adheres to socially responsible behaviors, for example creating jobs. However, by expanding the level of analysis to
the industry and viewing it as interconnected parts of the
same whole a clearer picture of common trends emerges.
Incentives determine the likely response of each of the
three blocks in the RVAA. The motivations are different for
J. Darville Á A. Faccia (&)
American University in the Emirates, Dubai International
Academic City, P.O. Box: 503000 Dubai, UAE
e-mail: alessio.faccia@aue.ae
J. Darville
e-mail: jeffrey.darville@aue.ae
© Springer Nature Switzerland AG 2020
M. Mateev and J. Nightingale (eds.), Sustainable Development and Social Responsibility—Volume 1,
Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-030-32922-8_3
23