Online platform’s corporate social responsibility for mitigating traffic risk: Dynamic games and governmental regulations in O2O food delivery industry

Highlights

• A data-driven approach helps to formulate consumers’ order function.

• Online platform’s fines decrease by information publicity of traffic violation.

• Order volume determines usages of governmental regulating policies of CSR efforts.

Abstract

Online-to-offline food delivery becomes popular in recent years, but the continuous growth of food couriers’ dangerous driving behavior causes severe traffic risk. This study explores the underline reasons for courier’s dangerous driving behavior in food delivery and suggests governmental regulations to mitigate traffic risk. We consider a supply chain including a platform and consumers, where the platform employs couriers to deliver food from restaurants to consumers in a time window. To conduct the research, we formulate consumers’ demand for food with statistical analysis. We then consider a Stackberg game between the platform and the government. Referring to the practice in public traffic management, spot check and information sharing of traffic violations are two common policies in government regulations. We find government’s efforts of information publicity effective for reducing courier’s dangerous driving behavior, thus mitigating the traffic risk in food delivery. The effectiveness of efforts on spot checks is on the contrary. Therefore, we propose an optimal policy serial of spot check and information publicity respecting different decision situations. The numeral experiments indicate that the policy is effective.

Introduction

Modern service industries have been developed rapidly with the help of information and communication technologies in the past several decades. Online to offline (O2O) economics has become a popular business model, among which O2O food delivery develops fast in recent years. O2O food platforms provide people a new option to order a meal online. For example, Grubhub, as a leading global online food delivery marketplace, connects more than 33 million diners and features more than 300,000 restaurant partners in over 4,000 U.S. cities (Delivering, 2018). iiMedia Research (2018) stated that the compound annual growth rate of the O2O food industry was more than 40% from 2011 to 2018 in China. In China, almost 5 hundred million diners use O2O food delivery services in 2020 (Tencent News, 2021). To enhance advantages in competition by shortening the time in delivery, the O2O food delivery platforms commonly set limited time windows in delivery and exorbitant fines to couriers for overdue delivery (Hsu et al., 2007, Griesbach et al., 2019). Employing the modern data miner technologies and optimization algorithms, the time window generated is more accurate and continually shortening in recent years (Aziez et al., 2020). According to Lai(2020), time window in average set by the platform in 2019 is 22 min less than that of 2016 for an 3 km order, gradually approaching the limits of courier’s working capacity. At the same time, there are many unpredictable objective factors in deliveries (e.g., rains, traffic jams, traffic lights, conditions of vehicle, among others) and personal status of couriers (e.g., physical difference between gender, personal fatigue, driving skills, familiarity with the road, etc.), it is often challenging for food couriers to finish the delivery in the time windows.

Criminal economics theory claims that individual economic factors is an important factor to initiate people’s violations of regulations (Becker, 1968). As a result, food couriers exhaust to shorten the delivery time and thereby avoid fines, which often leads to dangerous driving in the delivery process, e.g. speeding, violating traffic controls, illegally changing lanes, and driving in the opposite direction(Richer & Bergeron, 2009), causing severe traffic risk. For example, in Shanghai, in the first half of 2019, at least two O2O food couriers were killed or injured in traffic every day, which is four times that of 2017 (People’s Daily Online, 2017). In August 2020, more than 12 thousand couriers were caught for dangerous driving in Shenzhen, accounting for more than 10% of non-motor vehicle violations (Xinhua Net, 2020). Not only in China (Qin et al., 2021), traffic risk in the O2O food delivery industry has become a social concerned problem worldwide, such as in America (Lee, 2018), South Korea (Kwak & Cho, 2020), and European countries (Papakostopoulos & Nathanael, 2021).

The International Labour Organization (ILO) estimates that about 2.3 million people around the world succumb to work-related accidents or diseases each year in recent decades. Thus, providing safe working circumstance is becoming one important aspects of CSR in many industries. Several decades of years ago, the corporate social responsibility (CSR) became to be a broad concept that helps a company to be socially accountable (Christie & Wald, 2019). Companies can be conscious of the morale impacts by practicing CSR programs, which can take many forms depending on the company, e.g. social donations, environmental protection, safety workplace, etc. (Carroll, 1991). Several decades ago, providing safety workplace has become an important corporate social responsibility to employers (Montero et al. 2009) and transportation safety in work is widely used to estimate the CSR performance of companies (Turoń 2016). However, the CSR initiatives by companies are either voluntary or legally mandated, voluntary initiative are often motivated by pressures of the mandatory regulations (Uchida and Ferraro 2007). Therefore, the governments all over the world are increasingly proactive to promoting and facilitating CSR initiatives through the public policies in the past several decades, e.g., financial disclosure of public companies, consumer protection measures, tax deduction or exemption for CSR programs (Liu et al., 2016). It is critically urgent to propose governmental regulations in order to facilitate O2O platform’s CSR efforts on driving safety in food delivery. This study tries to answer two questions, that is, how O2O platform’s fines on over-due deliveries affect the counters’ traffic risky behaviors? Since many consumers prefer to engage the brands that take CSR activities (Peasley et al. 2021), how the government’s information publicity of traffic violation in spot check indirectly affects O2O platform’s decisions on fines?

In order to answer the questions, we conduct the research with several methods, which include regressions, mathematical derivations and simulations. Since the online platform makes revenues by fulfilled market orders, we adopt a regression model with empirical data to explore its determinants. The regression results suggest that the fulfilled market orders are indirectly related to fines, based on which we formulated a demand function for orders by Equation (1). Considering the demand function, the study formulates the online platform’s profit function and the government’s utility function, respectively. Because the decisions of the online platform and the government follow a Stackelberg game, we solve the platform and government’s optimal decisions by analyzing the games between them. Finally, numerical simulations are adopted to prove the effectiveness of the proposed regulation strategies and the sensitiveness of parameters.

The remaining part of this paper is organized as follows. In Section 2, we make a brief review of the existing literature regarding the workforces in the O2O economy and the corporate social responsibility in platform economy. In Section 3, we formulate the demand function based on empirical analysis. With the demand function, we derive the supply chain equilibrium decisions and governmental regulation optimal policies in Section 4. In Section 5, numerical study proves the analytical findings. Section 6 concludes this research and provide managerial insights, limitations and directions for future research.