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Watchdogs of the Invisible Hand: NGO monitoring and industry equilibrium

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  • Aldashev, Gani
  • Limardi, Michela
  • Verdier, Thierry

Abstract

Globalization has been accompanied by rising pressure from advocacy non-governmental organizations (NGOs) on multinational firms to act in socially-responsible manner. We analyze how NGO pressure interacts with industry structure, using a simple model of NGO-firm interaction embedded in an industry environment with endogenous markups and entry. We explain three key empirical patterns in developing-country industries under activist pressure: the degree of exit under more intense activist pressure, the differential response of industries to NGO activism, and the general rise of NGO activism following globalization.

Suggested Citation

  • Aldashev, Gani & Limardi, Michela & Verdier, Thierry, 2015. "Watchdogs of the Invisible Hand: NGO monitoring and industry equilibrium," Journal of Development Economics, Elsevier, vol. 116(C), pages 28-42.
  • Handle: RePEc:eee:deveco:v:116:y:2015:i:c:p:28-42
    DOI: 10.1016/j.jdeveco.2015.03.006
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    References listed on IDEAS

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    Cited by:

    1. Newman, Carol & Rand, John & Tarp, Finn & Trifkovic, Neda, 2018. "The transmission of socially responsible behaviour through international trade," European Economic Review, Elsevier, vol. 101(C), pages 250-267.
    2. Couttenier, Mathieu & Hatte, Sophie, 2016. "Mass media effects on non-governmental organizations," Journal of Development Economics, Elsevier, vol. 123(C), pages 57-72.
    3. Sophie Hatte & Pamina Koenig, 2017. "The Geography of NGO Activism against Multinational Corporations," PSE Working Papers halshs-01518148, HAL.
    4. Krautheim, Sebastian & Verdier, Thierry, 2016. "Offshoring with endogenous NGO activism," Journal of International Economics, Elsevier, vol. 101(C), pages 22-41.
    5. Pamina Koenig, 2017. "Notes on Sigwatch's NGO campaign database," PSE Working Papers halshs-01671758, HAL.

    More about this item

    Keywords

    NGOs; Globalization; Private regulation; Monopolistic competition;

    JEL classification:

    • L31 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Nonprofit Institutions; NGOs; Social Entrepreneurship
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection

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