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Inefficient NGO labels: Strategic proliferation and fragmentation in the market for certification

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  • Anthony Heyes
  • Steve Martin

Abstract

Nongovernmental organization (NGO) certification is a prerequisite for corporate engagement in enhanced social behaviors in many settings. Labels with broad scope (like “sustainability”) coexist with niche competitors much narrower in scope (like “bird‐friendliness”). When NGOs compete for adoptions, the wrong suite of schemes emerges, providing a rationale for regulation. An incumbent NGO may strategically narrow the breadth of its label to deter entry of competing schemes, reducing welfare. Even when entry is accommodated, welfare is compromised. Modeling multi‐issue competition between NGOs allows us to be the first to analyze label fragmentation and provide a novel perspective on proliferation that has frustrated practitioners.

Suggested Citation

  • Anthony Heyes & Steve Martin, 2018. "Inefficient NGO labels: Strategic proliferation and fragmentation in the market for certification," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 27(2), pages 206-220, June.
    • Handle: RePEc:bla:jemstr:v:27:y:2018:i:2:p:206-220
    DOI: 10.1111/jems.12236
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    References listed on IDEAS

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    Cited by:

    1. Poret, Sylvaine, 2019. "Label wars: Competition among NGOs as sustainability standard setters," Journal of Economic Behavior & Organization, Elsevier, vol. 160(C), pages 1-18.
    2. Virginia Navajas-Romero & Lorena Caridad y López del Río & Nuria Ceular-Villamandos, 2020. "Analysis of Wellbeing in Nongovernmental Organizations’ Workplace in a Developed Area Context," IJERPH, MDPI, vol. 17(16), pages 1-21, August.
    3. Ester Manna, 2023. "Bad NGOs? Competition in the market for donations and workers' misconduct," UB School of Economics Working Papers 2023/457, University of Barcelona School of Economics.
    4. Li, Yi, 2020. "Competing eco-labels and product market competition," Resource and Energy Economics, Elsevier, vol. 60(C).

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