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NGOs and the creation of value in supply chains

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  • Olivier Chatain
  • Elena Plaksenkova

Abstract

Research Summary: Firms and nongovernmental organizations (NGOs) often collaborate to establish new supply chains. With a formal model, we analyze how NGOs can alleviate market failures and improve supplier economic inclusion while strategically interacting with firms. We account for the specific goals of the NGO and the need to induce collaboration between firms and their suppliers. The analysis reveals a “valley of frustration,” when NGO efforts benefit all actors but only marginally the firm. We also show that more powerful firms might prefer to internalize NGO functions, while firms with lower bargaining power and higher investment requirements are better off collaborating with NGOs. Finally, we study NGOs‐firms matching patterns and find that firms with higher bargaining power match with NGOs holding stronger capabilities. Managerial Summary: This article analyzes interactions between firms and nongovernmental organizations (NGOs) aiming to improve the economic inclusion of suppliers or to promote the adoption of specific (e.g., sustainable) practices. For firm executives, this study shows the constraints and benefits associated with working with NGOs, the conditions under which integration of NGO functions is preferable as well as the types of NGOs that offer better prospects for a successful collaboration. For NGO executives, it highlights the need to provide enough economic incentives to firms and suppliers alike to ensure their collaboration and the trade‐offs associated with this constraint, in particular, if NGO capabilities are limited. Overall, the study provides a comprehensive understanding of how NGO activities can influence value creation in a vertical value chain.

Suggested Citation

  • Olivier Chatain & Elena Plaksenkova, 2019. "NGOs and the creation of value in supply chains," Strategic Management Journal, Wiley Blackwell, vol. 40(4), pages 604-630, April.
    • Handle: RePEc:bla:stratm:v:40:y:2019:i:4:p:604-630
    DOI: 10.1002/smj.2938
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    3. Darcy K. Fudge Kamal & Florence Honoré & Cristina Nistor, 2021. "When the weak are mighty: A two‐sided matching approach to alliance performance," Strategic Management Journal, Wiley Blackwell, vol. 42(5), pages 917-940, May.
    4. Izabela Delabre & Joss Lyons‐White & Clara Melot & Eirik Ingwardo Veggeberg & Anthony Alexander & Martin C. Schleper & Robert M. Ewers & Andrew T. Knight, 2023. "Should I stay or should I go? Understanding stakeholder dis/engagement for deforestation‐free palm oil," Business Strategy and the Environment, Wiley Blackwell, vol. 32(8), pages 5128-5145, December.
    5. Constance E. Helfat & Aseem Kaul & David J. Ketchen & Jay B. Barney & Olivier Chatain & Harbir Singh, 2023. "Renewing the resource‐based view: New contexts, new concepts, and new methods," Strategic Management Journal, Wiley Blackwell, vol. 44(6), pages 1357-1390, June.
    6. Dorothée Brécard, 2023. "How Corporate–NGO Partnerships Affect Eco-Label Adoption and Diffusion," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 86(1), pages 233-261, October.
    7. Guo, Lei & Yin, Haitao & Zhao, Xuan & Zhu, Qinghua, 2022. "Managing your own low-tier suppliers via donation to NGOs: Why do multi-national corporations bother?," International Journal of Production Economics, Elsevier, vol. 250(C).

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